shine trader live reports:
At 2:00 Beijing time on Thursday (November 4), the Federal Reserve will announce a new interest rate resolution. It is expected to announce that it will start to reduce debt purchases at a rate of 15 billion US dollars per month, and achieve the final completion of the monthly reduction in the middle of 2022. The task of buying 120 billion US dollars in debt. Investors are now paying more attention to when the Fed may raise interest rates to assess how it responds to rising inflation and eases concerns about economic recovery. Half an hour after the New Deal is released, Fed Chairman Powell will hold a press conference.
Taken the Review of the last issue
The Fed said after its September policy meeting that the industries most affected by the epidemic have improved in recent months. If progress continues as expected, the decision-making level judges that the pace of asset purchases may soon slow down.
But the Fed also pointed out that the increase in new crown cases has slowed the recovery. Since inflation has been consistently below the 2% target for a period of time, the decision-making level allows inflation to be moderately higher than 2% for a period of time. The Federal Reserve — Maintains the Federal Funds Rate in the current range of 0-0.25% Until labor market conditions have reached a level. — Maintains the Federal Funds Rate in the current range of 0-0.25% until Labor market Conditions have reached a level consistent with the committee’s assessment of full employment.
★ Highlights in this issue
1) Reduce debt purchases
The Federal Reserve currently purchases $80 billion in government bonds and $40 billion in mortgage-backed securities every month. Since the beginning of the plan, The Fed’s balance sheet has surged from US$4.4 trillion to US$8.6 trillion, of which the size of US debt and mortgage-backed securities is approximately US$8 trillion.
The Fed is most likely to reduce its monthly bond purchases month by month starting in mid-November, cutting US$10 billion in public debt and US$5 billion in mortgage-backed securities each month, and complete the full reduction process by June next year. Kathy Bostjancic, chief U.S. analyst at Oxford Economics, said: “In order to avoid financial market volatility and (market) interest rates surging above (natural) levels, the Fed will not suddenly stop buying debt.”
Many Fed officials predict that by some time in 2022, the global supply bottleneck will ease. After a large amount of spending on cars, Recycling and electrical appliances, American consumers’ demand for goods will cool down, and there will be enough Many people are pushing to return to work, and wage and welfare growth will also fade.
But in recent weeks, Fed officials have admitted that the forecast is variable. This year’s inflation spike has longer than expected. The inflation level has exceeded the 2% target set by the Federal Reserve by more than twice. Rising rents, low corporate inventories, and a large number of workers are still waiting to see whether they will return to work, which may mean that the current price increase The speed will continue.
The dilemma facing the Fed is whether inflation will ease before policymakers feel the need to raise interest rates to curb inflation. Although Fed policymakers generally describe the realization of the inflation benchmark as “there is still a long way to go.” But the market believes that average inflation is already climbing, And the Fed’s patience will soon run out.
Tim Duy, chief U.S. economist at SGH Macro Advisors, wrote: “If the Fed does not expect inflation to return to its target level within a reasonable period of time, the Fed may accelerate monetary policy tightening even if there is insufficient employment… In fact, the Fed has already Make it clear that it is waiting for more inflation data to see if the “temporary” argument is still valid.”
Reprint indicated source：Spark Global Limited information