Summary of article content After 3 years since December 2018… Quantitative tightening also announced
[Washington DC=AP/Newsis] Federal Reserve Chairman Jerome Powell attended the Senate hearing held at the Capitol in Washington DC on January 11th. 2022.01.27.
[Washington, Seoul=Newsis] Correspondent Kim Nan-young, reporter Yu Ja-bi = The US Federal Reserve has decided to raise the key interest rate for the first time in more than three years.
According to CNBC and others, the Fed issued a statement after the Federal Open Market Committee held on the 16th.
In addition, the Fed is said to have agreed to continue raising interest rates at the FOMC meeting this year for the sixth time and to reach the 1.9% level by the end of the year.
This is higher than the rate hike target announced in December last year. According to reports, at this meeting, St. Louis Fed President James Bullard insisted on a 0.5 percentage point increase. Other than that, everyone agreed with the decision that day.
It is the first rate hike by the Federal Reserve since December 2018. The FOMC said in a statement that it expects continued increases in the target range to be appropriate.
The Fed also announced the start of quantitative tightening. The Fed said at its upcoming meeting that it will begin reducing its holdings of government bonds, institutional debt and mortgage-backed securities.
Chairman Powell also hinted at a post-meeting press conference that the balance sheet shrink could begin in May. The Feds balance sheet has grown to $9 trillion with quantitative easing.
Chairman Powell cautioned against the risk of further upward pressure on inflation, and the committee decided to take the necessary steps to restore price stability. He said the US economy is very strong and in a good position to deal with tightening monetary policy.
The Commission also adjusted the economic outlook in several respects. The core personal consumption expenditure inflation forecast for this year has been revised up significantly from 2.7% to 4.1%.
In particular, paying attention to the potential impact of the war in Ukraine, we lowered our GDP growth forecast from 4% to 2.8%.
The committee also said that the Russian invasion of Ukraine is causing enormous human and economic hardship, and the impact on the US economy is very uncertain, but the short-term invasion and related events will create additional upward pressure on inflation.