Powell Rarely Released Policy Signals Before the Meeting…

Powell rarely released policy signals before the meeting. Several officials publicly supported accelerated cuts and talked about raising interest rates.

Fed officials have stated that there are reasons to accelerate the withdrawal of monetary support in the context of rising inflation, echoing Chairman Jerome Powell’s speech earlier this week.

On December 2, local time, Raphael Bostic, President of the Atlanta Federal Reserve Bank of the United States, stated at the meeting that if the Fed ends its debt reduction action before the end of March next year, it will be an appropriate decision, because it will allow the Fed to take the option of raising interest rates. , In order to deal with Qualcomm (177.03, 1.40, 0.80%) expansion.

The Federal Reserve began to reduce the scale of bond purchases last month and is expected to completely end its bond purchase plan by June next year. The Fed will consider shortening the bond purchase period at the next meeting of policymakers on December 14-15.

At present, due to strong economic growth and an improved job market, the inflation rate is more than twice the Fed’s 2% target. “I think it’s in our interest to complete this task some time before the end of the first quarter of next year,” Bostic said.

“I saw the OECD forecast this morning that the U.S. inflation rate may exceed 4% in 2022. If this level is true, then I think there are good reasons to push for further interest rate increases, and it may even be more than one increase.” He said. In contrast, if the data is lower than expected, the Fed will adjust accordingly.

Bostic said that once the Fed starts raising interest rates, it may act at a “slow and steady” rate, but if inflation does not fade as expected in the next year or two, it may need to “take stricter measures” to control inflation. .

“If the committee decides to complete the reduction earlier than originally expected in June, I will definitely support it,” Federal Reserve Governor Randal Quarles said in response to a host’s question after giving a farewell speech on Thursday. He will step down later this month.

At the Congressional hearing held this week, Powell said that Fed officials should consider speeding down the code at the next meeting. He warned that the new mutant strain poses risks to employment and inflation prospects, and the risk of high inflationary pressures is clearly rising.

It was an unusual move for Powell to release a clear signal of potential policy actions two weeks before the next meeting. However, his colleagues have also stepped up and publicly supported it.

San Francisco Federal Reserve Bank President Mary Daly echoed this view, reiterating that it may be appropriate to accelerate the reduction. Daly said that it is foreseeable that there will be a debate on an early interest rate hike, some of which are to raise interest rates even more substantially in 2022.

 

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Powell Rarely Released Policy Signals Before the Meeting - /10

Summary

Powell rarely released policy signals before the meeting. Several officials publicly supported accelerated cuts and talked about raising interest rates.

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