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American Express Co AXP

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Morningstar’s Analysis

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Unsurprisingly, FOMC Maintains Rates at Zero, Policy Update Could Be Next Real Change

Eric Compton, CFA Equity Analyst

Analyst Note

| Eric Compton, CFA |

The Federal Open Market Committee issued its latest statement on July 29 and, unsurprisingly, held the federal-funds rate at 0.0%-0.25% with a unanimous vote. Rates have been at zero since mid-March. Again, there really is no debate that rates ought to be at zero for now, unless you’re in the negative-rate camp, and the Fed has consistently said it is not seriously considering negative rates as a policy tool. The rate decision was not surprising, and there really wasn’t much else of note in the latest release. After a series of highly anticipated FOMC meetings and statements, this release certainly felt much less dramatic and appeared to simply be a continuation of a holding pattern. We expect that rates will likely remain at zero for years, as was signaled at the last FOMC meeting. We are leaving our current rate forecasts within our bank models unchanged, which currently project that the first rate hike will occur in 2023.

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Company Profile

Business Description

American Express is a global financial institution, operating in about 130 countries, that provides consumers and businesses charge and credit card payment products. The company operates a highly profitable merchant payment network. Since 2018, the company has operated in three segments: global consumer services, global commercial services, and global merchant and network services. In addition to payment products, the company's commercial business offers expense management tools, consulting services, and business loans.

Contact
200 Vesey Street
New York, NY, 10285
T +1 212 640-2000
Sector Financial Services
Industry Credit Services
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 64,500

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