Federal Reserve officials expect to start raising interest rates by 2023, earlier than predicted, according to new economic projections that predicted rapid growth and strong economic growth this year.
At the end of their two-day meeting on Wednesday, the US central bank kept its high interest rate at 0.25%, which has been the case since the outbreak began.
But back in March, when many Fed regulators predicted that prices would be kept until 2024, the deal had moved to the end of 2023, indicating the central bank’s confidence in rapid change and recovery. Fed opinion indicates that a two-fold increase is expected in 2023.
Central Fed financial analysts now estimate growth rates of 7% this year, compared to 6.5% in March, unemployment fell to 4.5%, according to earlier forecasts. High inflation is expected to be 3% this year, higher than the 2.2% expected in March, before returning to 2.1% in 2022.
“Advances in vaccination have reduced the spread of Covid-19 in the United States,” the Federal Open Market Committee said. “In the meantime progress and support for strong principles, economic indicators and jobs have been strengthened. The areas most affected by the epidemic are still weak but have shown improvement. ”
FOMC Wednesday kept Buy immovable property at $ 120bn a month – another part of the financial policy launched to address the financial crisis caused by the epidemic. Officials are expected to hold initial discussions on how and when things will turn out to be possible, but the statement did not specify changes.
Fed debt reduction measures, known as “tapering”, could be discussed months in advance. The Fed has said the economy needs to “continue to move forward” compared to last December to start recovering its financial support dramatically.
Right swelling he cried moving upwards Fed target of 2% on average, its overall employment target has not been met. A few other Americans are 7.6m to work than in February 2020.
The Fed has stressed that the correction of monetary policy is not based on the calendar but on economic outcomes. In particular, it said that as soon as it raises interest rates if the economy is fully operational with inflation at 2% and will exceed those levels for a while. However, when seven of the 18 members of the FOMC predicted in March the first interest rate in 2023, 13 said on Wednesday.
Since the last FOMC meeting in April, US markets have been in shambles, with borrowing prices falling from a recent rise, while women are urging the Fed to continue strengthening the currency and this year. inflation problems it will be temporary.
Government bonds in the US were sold after the Fed’s announcement, yields over the five-year fiscal year jumped 0.07 percent to 0.85%.
The two-year follow-up index sold 0.02 percent to more than 0.18 percent, while the 10-year index rose more than 0.04% to 1.54%. This is the same thing that happened in March, but was raised from the beginning of the week. Yields increase as prices fall.
The Fed also announced Wednesday that it will change the two-pronged technology, including how it pays banks in reserves located in the central bank. It raised the so-called IOER to 0.15 percent, from 0.10 percent. It also agreed to pay more than zero fees on the restitution program, which increased the rate by 0.05%.
Appropriate funds in the banks and banks are available he shouted to save money overnight at the Fed as they have less reliable, promising facilities to spend more money that has strengthened their finances since the beginning of the year. The Fed said in a statement that the reforms were aimed at helping “better manage the short-term financial markets”.
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