FED Publishes Monetary Policy Report: Information About Interest Rate Increase!

The Fed, in its latest semi-annual report on monetary policy and the economy to Congress on Friday, said the US Federal Reserve was “highly aware” of the challenges posed by high inflation for the economy and was “strongly committed” to the 2% inflation target for price increases. stated that.

Largely a retrospective summary of recent economic developments and Fed policy meetings, the report nevertheless offered some indication that the central bank expects the hitherto strong growth in consumer spending to decline as the year progresses and households spend their savings accumulated during the pandemic.

Consumer sentiment “remains very low,” the report said.

Overall, the report reiterated the themes that currently dominate the Fed debate: an “extremely tight” labor market with an undersupply of workers, economic growth that must likely slow further to dampen price increases, a financial system that absorbs interest rate hikes largely without any problems, and all of the above. however, inflation remained “well above the Federal Open Market Committee’s (FOMC) target”.

FED: “FOMC Predicts Continuation of Rate Increases Will Be Appropriate”

“In contrast… the FOMC continued to rapidly increase interest rates and reduce securities holdings,” the report said, and also “anticipates continued increases in the target range to be appropriate.”

Fed Chairman Jerome Powell will discuss the report and Fed policy at back-to-back congressional hearings next week, and will speak before the Senate Banking Committee at 6pm on Tuesday and the House of Representatives Financial Services Committee at 6pm on Wednesday.

Business loans issued by banks grew through 2022, but slowed in the fourth quarter, the report said. “Some indicators of future trade defaults are slightly elevated.”

The report also pointed out that problems such as the decrease in labor force participation that came to the fore during the pandemic could be the new normal for the USA.

Although the impact of the pandemic on the workforce has eased and immigration has recovered somewhat, the report states that a quick solution to the ongoing workforce shortages should not be expected.

“Due to the aging of the population, it is unlikely that the increase in the population retirement rate will reversibly significantly,” the report said: “The labor force participation rate will likely remain well below its pre-pandemic level.”

FOMC meeting on March 22 bitcoin will be followed closely by investors.

*Not investment advice.