Predictions of price increases have tumbled stocks and boosted bond yields as investors ruled out the possibility that the Fed would soon begin to garner widespread support for the existing economy since the onset of the epidemic. Will do, when he promised trillions of dollars. Prevent financial markets from freezing. The Fed did not indicate today that it intends to end this assistance.
Fed Chair Jerome Powell said the central bank still expects inflation to ease in the coming months but insisted it would look at the data to see if it was wrong. Yes or no
Despite concerns among some investors and economists that the recovery in prices over the past two months could be offset, Powell told reporters that the data support the Fed’s view that consumer demand Prices are rising due to temporary similarities in the economy due to rapid growth. Compared to producers can maintain. The Fed expects these barriers to be worked out gradually as the economy reopens more fully.
“But we do not rule out the possibility that it may take longer than expected,” Powell said. “It simply came to our notice then. We are in great danger.
Both the Fed and the Biden administration worked to avoid a slow recovery in the wake of the Great Recession, when Congress moved swiftly to rein in government spending and before the Fed showed significant signs of rising inflation. Began raising interest rates. Instead, they are pushing for high-powered growth this year that will bring the economy back to where it was before the epidemic and move on to recovery.
While Fed officials have predicted inflation in the wake of higher-than-expected readings, they do not yet expect borrowing costs to rise.
With higher growth expectations for the Fed’s economy as a whole, policymakers penned two rate hikes for 2023, although Powell stressed that such things are difficult to predict with any certainty. Is.
The Fed’s rate-fixing committee did not indicate in its statement that it would take the first step to withdraw its financial support once it could begin to slow its bond purchases.