Sumber: The Fed | Editor: Hasbi Maulana
Since the January FOMC meeting, foreign equity prices moved notably lower, on net, and generally declined more in the AFEs than in the United States. Longer-term yields on sovereign debt in AFEs either decreased moderately or ended the period little changed, in contrast to the increase in U.S. Treasury yields. Weaker-than-expected economic data weighed on market-based measures of expected policy rate paths and on longer-term yields in Canada and in the euro area. Communications from the Bank of Canada also seemed to contribute to the decline in Canadian yields. In the United Kingdom, longer-term yields were little changed, on net, alÂthough the market-based path of expected policy rates moved up moderately in response to Bank of England communications. In emerging market economies (EMEs), sovereign yield spreads widened modestly, and flows into EME mutual funds were volatile over the period.
The broad nominal dollar index appreciated moderately over the period, largely reflecting an outsized depreciation of the Canadian dollar and a massive devaluation of the Venezuelan bolivar. (The Venezuelan government devalued the official Venezuelan exchange rate by more than 99 percent against the dollar, bringing the official rate closer to its black market value.) Lower oil prices, weaker-than-expected economic data, and uncertainty over U.S. trade policy likely contributed to the weakness in the Canadian dollar. In contrast, the Japanese yen appreciated against the dollar, in part supported by safe-haven demand. Late in the intermeeting period, the British pound was boosted by news of a preliminary agreement between U.K. and European Union authorities regarding the transition period of the Brexit process, but the pound still ended the intermeeting period modestly weaker against the dollar.
Staff Economic Outlook
The staff projection for U.S. economic activity prepared for the March FOMC meeting was somewhat stronger, on balance, than the forecast at the time of the January meeting. The near-term forecast for real GDP growth was revised down a little; the incoming spending data were a bit softer than the staff had expected, and the staff judged that the softness was not associated with residual seasonality in the data. However, the slowing in the pace of spending in the first quarter was expected to be transitory, and the medium-term projection for GDP growth was revised up modestly, largely reflecting the expected boost to GDP from the federal budget agreement enacted in February. Real GDP was projected to increase at a faster pace than potential output through 2020. The unemployment rate was projected to decline further over the next few years and to continue to run below the staff's estimate of its longer-run natural rate over this period.
