shine trader live reports:
The timing of debt reduction has no direct signal significance for raising interest rates. The Federal Reserve Open Market Committee announced that it would maintain the target range of federal funds interest rate at 0-0.25%, and would start the debt reduction plan in late November, reducing the monthly asset purchase scale by $15 billion.
Federal Reserve Chairman Powell
At a press conference after the interest rate resolution, US Federal Reserve Chairman Powell stressed that the timing of reducing the purchase of bonds has no direct signal significance for raising interest rates. The focus of the monetary policy meeting is to reduce the purchase of bonds, rather than increase interest rates.
On the reduction of the bond purchase plan, Powell said that the reduction of the bond purchase plan will end in mid-2022 and is ready to adjust the pace of bond purchase according to the economic situation. The debt purchase reduction is earlier and faster than expected six months ago. Even if the scale of bond purchase is reduced, the Fed’s policy also provides strong support for the economy.
On the interest rate hike position, Powell said that it is not the time to raise the benchmark interest rate, and the time to reduce bond purchase has no direct signal significance for interest rate hike. “Continue to strictly test the economic conditions that need to be met before raising the federal funds rate,” Powell said.
Asked whether “the expectation of raising interest rates in 2022 reflected by the market is wrong”, Powell said that the Fed’s benchmark judgment is that as the epidemic subsides, the superposition of supply chain bottlenecks and inflation will ease in 2022. Although it is difficult to give a precise time, inflation will generally fall in the second and third quarters of next year. As for raising interest rates, it still depends on the development of the economy itself, but the Fed can maintain enough patience.
On inflation, Powell said that the Fed believes that higher inflation will continue and will use tools to control inflation at an appropriate time. With the adjustment of the economy, the inflation rate will fall to close to the target of 2%. Powell pointed out that inflation is not caused by the labor market, but by supply bottlenecks and strong demand, but policy tools can not alleviate supply constraints, so it is difficult to predict future inflation and the timing is still uncertain. The basic expectation is that the supply chain problem will continue until next year.
Powell said that many people have different understandings of the word “temporary”, and some may regard it as “a few months”, but for the Fed, using this word to reflect high inflation will not exist for a long time.
In response to the trading scandal of Fed officials, Powell said that the Fed has taken strong action against the stock trading behavior of Fed officials. Instead of guessing whether the transactions of Federal Reserve officials are illegal, the Federal Reserve attorney general is studying whether those transactions violate the rules. It is too early to assess the damage to the reputation of Fed officials’ transactions. On the issue of official trading, the Fed must take the necessary measures to ensure that it will not repeat its mistakes.
Reprint indicated source：Spark Global Limited information