DThe U.S. Central Bank insists on its bond purchase plan and keeps the key interest rate between 0% and 0.25%. This was decided by the governor of the central bank at a two-day open market committee meeting and announced on Wednesday. However, the wording in the official statement regarding the purchase of bonds allows central bankers to wish to review at each subsequent meeting whether it is still reasonable to continue quantitative easing at the current level given the rapid economic recovery. In the U.S.
This U.S. Federal Reserve According to the decision made in December last year, it will increase its investment portfolio month by month, including government bonds worth at least US$80 billion and mortgage bonds worth at least US$40 billion. Federal Reserve Chairman Jerome Powell emphasized the role of the plan in supporting the economy and financial market supply at a press conference on Wednesday. People will check meeting by meeting whether the prerequisites for the plan still exist, and most importantly, if purchases should be restricted, signal to the financial markets as soon as possible: “But we are not there!” Powell emphasized.
Powell believes there will be inflation in freight and travel
The Chairman of the Federal Reserve expects inflation to exceed the 2% target in the coming months. He admitted that the price increase was stronger than expected. But this has not changed the Fed bankers’ judgment that the impact is temporary.noisy Powell If inflation is caused by a few products such as cars and holiday travel, then it is by no means universal. Long-term inflation expectations are still in line with the inflation target. The new monetary policy framework allows the Fed to temporarily tolerate inflation rates higher than 2% without intervention, as long as the 2% mark seems safe in the long run.
Powell and his colleagues also hope to stick to a loose monetary policy because they believe that the labor market has great potential for improvement. The last unemployment rate of 5.9% did not reflect the complete reality. Many people have left the job market at least temporarily. In addition to price stability, maximizing employment is the second goal of the Fed. However, the Fed no longer mentions specific indicators for this purpose.
