US Federal Reserve
The Federal Reserve raised interest rates by 0.25 percentage points on the 16th. This is the first rate hike since December 2018, and the Fed has been holding rates close to zero since March 2020.
The Fed also signaled that it would raise interest rates at its six remaining Federal Open Market Committee meetings this year to respond to inflation, the fastest-growing rate in 40 years.
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“A 0.25%p increase in the base rate… It is appropriate to continuously raise interest rates within the target range.”
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In a statement after the two-day FOMC meeting, the Fed said, “Inflation continues to rise while economic activity and employment indicators continue to strengthen.” “I decided to upload it,” he said. “We expect that it will be appropriate to continuously raise interest rates within the target range,” he said.
At the meeting, St. Louis Federal Reserve Governor James Vlad was the only one to vote against the 0.25 percentage point increase. He insisted on a 0.5 percentage point increase.
As for the employment situation, the Fed said “the unemployment rate has been falling as employment has increased in recent months”.
US Federal Reserve
However, he expressed great concern about inflation. “Inflation continues to rise in the wake of the imbalance between supply and demand,” the Fed said in a statement. It is likely to act as an upward pressure on inflation.”
“The Commission expects inflation to return to its 2% target level, with the labor market in a healthy state through appropriate monetary policy,” it said.
As for the Feds cutbacks in its financial statements, the statement said, “We expect to begin reducing Treasury holdings and mortgage-backed securities at an upcoming meeting.” The Fed has been buying government bonds and mortgage securities to support the economy during the COVID-19 crisis.
In addition, the Fed will be prepared to “complex information on public health, labor market conditions, inflation pressures and forecasts, and financial and international issues, and adjust monetary policy if necessary to achieve the committees goals.” ” he said.
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Interest rate forecast… 1.9% by the end of this year → 2.8% in 2023
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The Fed expects interest rates to be 1.9% by the end of the year. According to a dot chart showing the rate forecasts of FOMC members, the Fed expects interest rates to rise to 1.9% this year, higher than expected, rise to 2.8% in 2023, and remain at the same level through 2024.
Inflation was much stronger than the Fed had initially expected. The Fed has raised its core inflation forecast for this year to 4.1% from 2.7% in December.
On the other hand, it lowered its GDP growth forecast for this year by 1.2 percentage points to 2.8% from the previous 4.0%.
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Chairman Powell said: “Im concerned about rising inflation pressures… we can speed up if necessary.”
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Reporter Dongmyung Woo = Federal Reserve Chairman Jerome Powell attends a hearing before the Senate Banking Committee hearing at the Capitol in Washington, DC, on the 30th. AFP=News1
“The US economy is very strong and in a very good position to deal with tightening monetary policy,” Fed Chairman Jerome Powell said at a press conference on Wednesday. can be increased,” he said.
Regarding the atmosphere of the meeting, Chairman Powell said, “The committee was acutely aware of the need for price stability” and “decided to use tools to do this.”
Regarding the balance sheet reduction, he said, “The members have made considerable progress in making plans this week, and although a decision has not been made yet, the process may begin at the meeting in May.”
“This statement shows just how concerned the Fed is with inflation,” said Edward Moya, senior market analyst at Oanda.
“By raising interest rates, the Fed has started a series of steps to curb inflation and reap the stimulus package in a pandemic,” said Greg McBride, chief financial analyst at Bankrate. You may encounter another form of inflation, such as an increase in mortgage interest rates,” he said.
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“There was no surprise news”…
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New York Times Square Nasdaq Marketplace
The New York Stock Exchange rose despite the interest rate hike.
“The Fed has finally formalized the rate hike, no surprise news,” said Mike Rowengart, managing director at Etrade. ; was evaluated.
