Federal Reserve to announce its next move, interest rates may not be the focus

The U.S. Federal Reserve is expected to announce its latest moves, but with interest rates already near zero, the focus of the meeting may shift. Yahoo Finance's Brian Cheung breaks down what to expect.

Video Transcript

ALEXIS CHRISTOFOROUS: All right, we are just a few hours away, folks, from the Fed's latest policy decision. And the markets are really hoping to hear a promise of more aggressive moves from the Fed. Our Fed correspondent, Brian Cheung, is with us this morning. Hey, Brian, aggressive moves, I mean, we've got rates at about zero. What more can the Fed do here to be aggressive?

BRIAN CHEUNG: Well, good morning. And usually in these pre-scheduled federal open market committee meetings, we watch for what the Fed is doing on interest rates and also on the balance sheet. But as you just mentioned with rates already near zero and QE basically being unlimited right now, what more can the Federal Reserve do? And the focus is really going to shift on its ballooning balance sheet.

Keep in mind, it's at $6.6 trillion as of last Wednesday. And then also the the nine liquidity facility that's opened up to try to make sure that the financial markets are functioning properly from the US dollar to US treasuries to even risky corporate debt. Now something that's going to be interesting now with a new GDP data this morning is going to be the economic forecasts from Chairman Jerome Powell.

Keep in mind that we are not going to get any sort of economic projections in this meeting, that we won't get that until the June meeting, but we will have a press conference with Jerome Powell. That starts at 2:30 today, where he could provide some more color about the depth of the recession that the US, likely find itself in, as a result of the data that we just saw today. Keep in mind, before all this began, Jerome Powell was really championing the US consumer, saying that because the US consumer is 70% of the economy, it was really the consumer that was driving that post-crisis recovery that we had seen up until the coronavirus earlier this year.

So the question is going to be, as the GDP numbers show just how terribly the US consumer has been impacted with everyone staying at home, what does that mean for the Federal Reserve's response function? I think that'll be a big focus in that press conference. Again, at 2:00 PM is when we're going to get the statement. And then 2:30, there will be a televideo conference that will begin with Jerome Powell. Alexis.

ALEXIS CHRISTOFOROUS: All right, we're going to be carrying that live here at Yahoo Finance's. Brian Cheung, thanks for that.