The Fed’s Monetary Policy Keeps Equities Moving Higher

August 30, 2021

The Fed’s Monetary Policy Keeps Equities Moving Higher Photo

Last week’s Jackson Hole speech by Federal Reserve (Fed) Chair Jerome Powell struck an accommodative tone, pushing U.S. equities to new all-time highs. Monetary policy accommodation, in terms of expanding the Fed’s balance sheet and keeping longer-term interest rates low, continues to help stock prices move higher despite concerns that the economy may slow down in the coming months due to the resurgence of the pandemic.

This week, the August employment report will be released and likely show a modest slowdown in new jobs for the month. Expectations are for 750,000 new jobs to be added and the unemployment rate to fall slightly to 5.2% from July’s figure of 5.4%.

Despite many challenges surrounding the pandemic and geopolitical risks, the amount of monetary and fiscal stimulus will likely continue to push prices of many asset classes higher in the near term.

Tags: Federal Reserve | Stocks | Monetary policy | Employment data | COVID-19 pandemic

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