While the US Federal Reserve announced that it kept the interest rate constant, it increased its decision to decrease by 15 billion dollars in bond purchases to 30 billion dollars every month, doubling the slowdown in buybacks. Fed Chairman Jerome Powell spoke after the statement.
It was announced that the FED kept the highly anticipated interest rate decision in global financial markets and crypto money markets. After the interest rate remained stable, the markets gave a positive first reaction. bitcoin price $47,830 from the levels $49,300 showed an increase.
Fed Chairman Powell said:
“We foresee rapid growth with the emergence of the omicron variant and the increase in cases in recent weeks. And as predicted in the forecasts, the median growth forecast is 5.5. Labor market conditions are changing. We are working for maximum employment.”
said.
We expect inflation to reach our long-term target of 2%, high inflation presents challenges. We know that it pushes people who are trying to meet their most basic needs more. We will use our strength to prevent inflation from ossifying. We recognize that everything we do impacts families and businesses. We will do everything to achieve the price stability target at the FED.
Answering questions from journalists after his speech, Powell said:
If we think about the inflation problem right now, does today’s change mean that nothing will change in the next 6 months?
Let me tell you why we didn’t finish it now, we learned to deal with balance sheet problems, we doubled the speed. We’re almost done with before we finish tapering. Your other question is interesting, in this world, financial conditions, financial markets, all interconnected and can change very quickly. The economy can be affected quickly. However, when we give the information about what we are going to do beforehand, the markets react much more slowly to this and it is prevented from reacting sharply.
Is it because of your policy not to raise interest rates until tapering is over?
Yes, if we raise interest rates before tapering, the tapering must end earlier. We do not think this is appropriate. We still do not think of a situation where we will have to raise interest rates when buying assets.
We are watching a very good performance on the way to maximum employment. We aim to end the contraction by mid-March. The economy no longer needs ever-increasing amounts of support.
What do you think about the Omicron variant? What do you think, even though it hasn’t had much influence in America?
We all follow the same experts. At first it was said that it was not serious and spread quickly. I am reading and following the same thing as you. We don’t know what’s going to happen, and it’s hard to predict. Maybe it can come to the USA. But what we really need to think about is how will it affect the economy? How will it affect demand? How will it affect supply? We don’t know how hiring people will be affected. A large part of the country is experiencing a real delta wave. It is also very difficult to estimate the impact of the economy on them. But wave after wave comes. For this reason, people who take the new variant are less affected by the new variant. Of course, the delta had its effects. It had affected global supply and supply chains. But we don’t know much at this point. I think we will not know much in 3 or 6 weeks.
Are you sure we can get through this no matter what Omicron does? Can the economy handle this?
Yes, we will definitely come through this. Omicron is not very effective on our economic targets.
There has been a slight change in your perspective on inflation, can you explain this a little bit?
Yes, we were looking at it temporarily, and we had evidence of that as well. Of course, we saw a decrease in inflation for 5 months, but there was no real progress. There was no improvement in other sectors. However, inflation showed us that it was more persistent. For this reason, we brought tapering forward and we do it faster, and we continue to implement our policy more strongly for this reason.
You said that inflation does not affect wages, what do you think about this now?
Yes, you are right, we think that it does not affect the wages. Let’s assume that the economy improves in the future, but there are other things that this leaves behind. These can cause persistent inflation. This is reflected in the prices by putting pressure on the companies and we do not think that this will happen at the moment. Another thing is the rent, which is also very important. This is another thing that creates sensitivity in terms of economy. We have to observe all this.
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