The Federal Reserve meeting this week ended with a clear message: the monetary policy of the US is about to settle very strong.
The central bank did not set a precedent by announcing in November the end of its major epidemic program. It also provided new and timely information to senior officials expecting interest rates to rise.
But money matters were not the only issue in the area. Here are five things we learned from Feeding Jay Powell’s press chair Wednesday:
Strengthening major financial resources
No head has hit the financial markets more than once when the Fed’s idea of reducing or “setting its $ 120bn program a month.” of inflation and major work.
In a detailed discussion of the taper so far, Powell Wednesday revealed US steel could be serious enough for the Fed to announce a reduction in its bond-buying program at its next meeting in November. And he revealed that the Federal Open Market Committee strongly supports the “slow” taper, with the aim of fully reviving it by the end of the second half of next year.
There was also a shift in indications of increased interest rates recorded by Fed officials. Many policymakers now expect that interest rates will increase again next year, with the 18-member committee split at the same rate in 2022. The increase in inflation was added in 2023, marking three changes by the end of that year.
Advertisers take the time to speed up the process, with the S&P 500 very close Wednesday.
“There was a lot to be done but I don’t feel like everyone is feeling overwhelmed, which is what the Fed has promised to do,” said Megan Greene, dean of Kennedy State School at Harvard University.
Debt problems
Powell also added his name to the list of key policy makers to warn of the consequences that US lawmakers have failed to raise. debt repayment.
Secretary of Treasure Janet Yellen recently said the US government could run out of money next month unless Congress does, but Republicans and Democrats are not approaching a ruling even though the deadline is approaching this month.
Once the US repays its debt, it could be “extremely vulnerable” to the economy and financial markets, he said. Powell, adding: “It’s not something we have to consider.” He also warned of anyone who thinks the Fed or “anyone else” can “protect” the financial or financial markets in the long run.
A creditor who has been wasting time on Fed funding, says David Kelly, a market chief at JPMorgan Asset Management: “This could change their time. It could change the whole world economy.”
Conflicts
The Fed chairman added more details about the review, which was launched by the agency for sale to officials, after Presidents Robert Kaplan and Eric Rosengren were present. hardly set aside a year in which the central bank works overtime to strengthen financial markets.
Powell acknowledged that as a rule, Fed officials should not have the assets that the central bank buys, and promised to continue to “carefully review” its rules, which he said appeared to be stable.
“No one at FOMC is happy to be in this situation [and] having these questions, ”he said.
Powell also claimed that the Fed’s intrusion into the stock market meant that he also had other securities – state or munis – that were repurchased by the central bank. But he insisted that the Office of Government Ethics ruled that there was no dispute.
“Munis always thinks it is a good place to be safe for a Fed person to invest because, as you know, the concern was that the Fed would not be able to buy urban security,” the Fed chairman said.
“Then came the Covid crisis and I changed the policy… Don’t procrastinate.
Infectious diseases?
Fear of transmission from debt problems to Chinese goods giant Evergrande rocked the markets this week, but Powell said he believed this was “especially in China”.
While there is no evidence of a US economic downturn in Evergrande, or Chinese banks, Powell acknowledged that the crisis could affect investor confidence, which could lead to economic instability.
Some analysts have suggested that there could be a crisis if Evergrande’s crisis could lead to a slowdown in China, with the economy accounting for about 30% of household sales.
“China’s growth and development in China affect global trade regulation, global trade regulation and global economic governance,” said Tiffany Wilding, North American economist at Pimco.
“If it shrinks, what we think it is, it will be returning to the rest of the world and spreading to the US.”
Change
The Biden government has not yet commented on its plans to reform the Fed because it is difficult to decide whether or not to do so. benefit Powell for another time. Powell, whose term expires in 2022 and is expected to continue using the above, has answered any questions about what will happen to the Fed.
“I think the phrase, ‘I have nothing on you today’,” he mocked. “I try to do my job every day for the American people.”
Powell also said, however, that he has received a bank transfer from the vice-president of the central bank, who will be appointed after Randal Quarles’s departure at the end of next month.
Investigators say Fed ambassador Lael Brainard is in Quarles position. Brainard has also received support from many progressive Democrats as Powell’s successor.