Fed in Focus

July 26, 2021

Fed in Focus Photo

This week’s Federal Open Market Committee (FOMC) meeting will capture significant attention as the Federal Reserve (Fed) provides its perspective on the path for interest rates and the future of its asset purchase programs. This meeting occurs at an important time, with inflation continuing to rise above the Fed’s target levels. The year-over-year growth in inflation rose to 5.4% in June, the highest in more than a decade. The language that the Fed chooses to describe inflationary pressures also has implications in Washington, as the talk about inflation draws growing political scrutiny and puts the Fed in an uncomfortable position.

The Fed must contend with the resurgence in the global pandemic due to the Delta variant when setting monetary policy. The pandemic’s impact makes the near-term path for growth in the economy more uncertain. The Fed will likely shed more light on its plans for tapering its asset purchases during the post-meeting press conference, when I expect Fed Chair Powell to provide more context around several of the key issues facing the Fed that may not be addressed in the post-meeting statement.

Stocks in the U.S. reached new highs last week, with strong corporate profits playing a key role. Barring a surprise from the Fed this week, I expect near-term market trends to continue.

Tags: Federal Reserve | FOMC | Interest Rates | Inflation | Monetary policy

< Go to Monday Morning O'Malley

This blog post is for informational use only. The views expressed are those of the author, Dave O’Malley, and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client.  Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.

Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice.  The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete.  Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements.  Actual results may differ significantly.  Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.

Investing involves risk, including possible loss of principal.  Past performance is no guarantee of future results.  All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.

High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.

All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.

Subscribe to Our Publications