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The Federal Reserve has been set up to reaffirm its interest rate-raising target in March for the first time since the outbreak began, with the US Central Bank launching a campaign to boost the economy.
Fed officials have summoned this week for their 2022 policy conference, the first since the central bank has waged a war against consumer price growth in the US.
The Fed has tightened its grip on recent weeks over rising commodity prices, with chairman Jay Powell calling this month “”high risk”For economic growth and for a stable labor market.
Proponents of her case have been working to make the actual transcript of this statement available online.urgently or expeditiously”Than we had expected and rapidly reduced the Fed’s main page this year.
Combined with the overwhelming evidence that inflation is enlargement and the labor market is quick healing, the central bank is set to move in March, with many Fed officials and Wall Street economists arguing.
“The labor market is volatile, inflation is rising and prices are rising sharply,” said Peter Hooper, Deutsche Bank’s chief financial officer, who has been working with the Fed for almost three decades. “Do we still need to be at risk of financial backing? No.”
Continuing to confirm that the Fed could raise prices in the near future, economists are also looking at a clear direction on the way forward after the first change. The central bank policy statement is due to be released Wednesday, followed by a press conference with Powell.
Fed officials are divided over whether the central bank will announce the end of its procurement program, which is due to end in March. Powell confirmed the term earlier this month, but according to ING, there is no “reason” for the central bank to buy additional bonds.
In December, Fed officials rallied around a three-fold increase in 2022, with three more in 2023 and two in 2024. laid the foundation of information.
One of the hawkish officials and a voting member this year on the Federal Open Market Committee – James Bullard of St Louis – said he was supporting a four-pronged rise this year. Christopher Waller, governor, said five would be appropriate if inflation remains high.
Jason Thomas, head of international research at Carlyle, went so far as to say that seven this year is “impossible”.
“What the Fed has prepared for us is that we can raise prices at any meetings after January,” he said.
Some speculate that the Fed may also consider raising interest rates by half in March – something they have not done since May 2000.
Bill Nelson, a former deputy director of the Fed board of finance department, said the central bank should “prepare the people” for this to happen this week.
“Responding to what is happening here in a gradual manner is just too much for them and in the end it ends with a lot of improvement,” says Nelson, who is now a financial analyst at the Bank Policy Institute. “More and more people are taking the plunge on a slower pace in the past without considering what it means to have a budget and reduce inflation.”
However Jan Hatzius, an economist at Goldman Sachs, whose forecast is in line with what the market is expected to grow in 2022, said such a big move is doubtful and unnecessary.
“The question is more, do you see several times in successive meetings?” told the Financial Times at a Chicago Council event on Global Affairs Thursday. “This is possible.”
A sudden overhaul of hawkish Fed policies that threaten growth and the “biggest threat” to financial markets this year, warned Holly MacDonald, chief financial officer at Bessemer Trust.
“Success is not just a matter of falling in love. Success and departure [zero], “said Matt Toms, chief financial officer at Voya Investment Management, commenting on the current state of federal funds. for this year.
Equity markets have underwent a dramatic upheaval in recent days as investors have shared the concerns of the Fed’s tightening tightness, while stocks are suffering around the world. severe weakness in the past years last week.
Economists also this week expect more from the Fed’s plans reducing its dimensions, which has doubled since early 2020 and is now under $ 9tn.
In the first in-depth discussion on the issue in December, the FOMC agreed to reduce the rate faster than the pace set after the 2008 global financial crisis.
Nancy Vanden Houten, an economist at Oxford Economics, predicts that the Fed will set a monthly fee of $ 30bn at Treasuries and $ 15bn in debt protection for third-party corporate debt, and subsequently raise to $ 60bn and $ 30bn, respectively. .
Similarly, the investment will drop to $ 6tn by 2025, according to estimates.
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