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The Fed remains fully supportive of the economy and should boost stocks while dollar printing will likely keep the dollar down, Yohay Elam, an analyst at FXStreet, informs.

Key quotes

“The dot plot is showing no changes in rates until at least 2022. While that also implies no full return to previous output by then, it provides a long horizon for investors to favor stocks over fixed income.” 

“Jerome Powell, Chairman of the Fed, has announced that the bank will continue buying bonds and Mortgage Based Securities ‘at least at the current pace.’ That is naturally positive for stocks, which have risen on the $3 trillion ballooning of the Fed’s balance sheet. And it weighs on the dollar.”

“The Fed’s projections foresee an unemployment rate of 9.3% by year-end while the outlook for GDP growth is also downbeat in absolute terms – a fall of 6.5% and only a 5% bounce in 2021. That means the output will return to previous levels only 2022, but at least the downfall will not be that horrific.”

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