The Federal Reserve (Fed) wants us to prepare for the worst. The central bank delivered a dovish message at the July meeting without any signal for imminent policy changes, noting that forward guidance is still under review. Chairman Powell underscored that although some things had improved there is still work ahead to fully repair the economy and linked the outlook to the virus path. He noted: “Following sharp declines, economic activity and employment have picked
up somewhat in recent months but remain well below their levels at the beginning of the year.” He reiterated that the virus “poses considerable risks to the economic outlook over the medium term”. Fed officials simply marked time by acknowledging that “overall” financial conditions have improved “in recent months”.