shine trader limited reports:
The Federal Open Market Committee announced that it would maintain the target range of the federal funds rate at 0-0.25%, in line with market expectations.
The Federal Reserve said it would continue to buy $120 billion of bonds a month – $80 billion of treasury bonds and at least $40 billion of institutional support bonds a month until it could significantly further move towards the Commission’s goal of maximum employment and price stability. The Fed said that since December last year, the economic situation has made progress towards these goals, and the committee will continue to evaluate this process at its next meeting.
The Fed said that “the pace of asset purchase will slow down soon”, but did not specify the specific time.
At a press conference after the meeting, Fed chairman Powell said that the Fed “may announce the reduction of bond purchase at the next policy meeting as early as possible”, and does not rule out the possibility of waiting for a longer time to restart. The next Fed policy meeting will be held on November 2-3. The dot matrix also shows that nine members of the Committee predict to raise interest rates in 2022, and the other nine members are expected to keep raising interest rates from 2023. In June this year, among the 18 officials involved in the forecast, 7 members of the committee are expected to raise interest rates in 2022, up from 4 in March this year; 13 members are expected to raise interest rates in 2023, compared with 7 members in March this year.
Compared with June, the Federal Reserve significantly reduced the US economic growth this year to 5.9% (the forecast value in June this year was 7.0%), and recovered to 3.8% (the forecast value in June this year was 3.3%) in 2022. The unemployment rate is expected to be 4.8% this year (4.5% predicted in June this year) and 3.8% in 2022 (3.8% predicted in June this year). The inflation of PCE (personal consumption expenditure) will be significantly increased to 4.2% (the forecast value in June this year is 3.4%), and will fall back to 2.2% (the forecast value in June this year is 2.1%) in 2022. Core PCE inflation has been raised to 3.7% this year (3.0% forecast in June this year) and will be 2.3% in 2022 (2.2% forecast in March this year).
The three major indexes of US stocks rose collectively. As of the close, the Dow Jones index rose 338.48 points, or 1.00%; The NASDAQ index rose 150.45 points, or 1.02%; The S & P 500 index rose 41.45 points, or 0.95%.
The following is the full text of the statement:
(delete: in this challenging period,) the Federal Reserve is committed to using all tools to support the U.S. economy, so as to achieve the goal of promoting maximum employment and price stability.
With the promotion of vaccines and strong policy support, indicators of economic activity and employment are strong. The industries hardest hit by the epidemic have also improved in recent months, but the rise of new crown cases has slowed the recovery. (July Original: the industries hardest hit by the epidemic have also improved, but they have not yet fully recovered.) inflation has also risen, mainly reflecting the impact of short-term factors. Overall, financial conditions remained loose, partly reflecting the policy effect of supporting the flow of economy and credit into American households and businesses.
The economy back on track continues to depend on the spread of the virus. The progress made in vaccines is likely to continue to reduce the impact of the public health crisis on the economy, but the threat to the economic outlook remains.
The Committee aims to achieve the maximum employment and 2% inflation target in the long term. As inflation continues to fall below this long-term target, the committee will strive to make inflation moderately higher than 2% in the coming period, so as to make inflation reach an average level of 2%, and the long-term inflation expectation is just anchored at 2%. The committee wants to keep monetary policy loose until these goals are achieved. The committee decided to maintain the federal funds rate at 0-0.25% and considered it appropriate to maintain this target range until labor market conditions reach the maximum employment level assessed by the committee, and inflation rises to 2% and will moderately exceed 2% in the future. In December last year, the Committee indicated that it would continue to increase its holdings of treasury bonds to US $80 billion and at least US $40 billion of institutional support bonds until it could significantly further move towards the committee’s goal of maximum employment and price stability. Since then, the economic situation has made progress towards these goals. If progress continues to be broadly in line with expectations, the Committee judges that asset purchases will soon guarantee a slowdown. (original July: since then, the economic situation has made progress towards these goals, and the committee will continue to evaluate this process at its next meeting.) these asset purchases help promote the stable operation of the market and loose market conditions, thus supporting the flow of credit to households and businesses.
In assessing the appropriate monetary policy position, the committee will continue to monitor the impact of future economic data. If the occurrence of risks will hinder the achievement of the committee’s dual objectives, the committee will be ready to adjust the appropriate monetary policy position. The committee’s assessment will take into account a large amount of information, including public health, labor market indicators, inflation pressure and inflation expectation indicators, data on financial and international developments, etc.
Those who voted in favor include: Chairman of FOMC Committee (Chairman of the Federal Reserve), Jerome h. Powell, chairman; John C. Williams, vice chairman of the Committee (Chairman of the New York Fed); Thomas I. Barkin, chairman of Richmond Federal Reserve; Raphael w. Bostic, chairman of the Atlanta fed; Michelle W. Bowman (Federal Reserve governor); (board of Governors of the Federal Reserve) Lael Brainard; Richard H. Clarida (Federal Reserve governor); Mary C. Daly, chairman of the San Francisco Federal Reserve; Charles L. Evans, chairman of the Chicago Fed; Randal K. Quarles (Federal Reserve governor); (Federal Reserve governor) Christopher J. Waller.