The Federal Reserve today voted to accelerate its $ 30 billion-a-month bond-boosting cut to close the program by March, instead of the original plan for June 2022, marking that its inflation target has been met.
The central bank also put on the table the possibility of three interest rate hikes next year, from just one that was in its previous forecast in September.
In the new economic forecasts published after the end of the two-day meeting of the Federal Open Market Committee (FMOC) of the Fed, US central bank officials estimate that inflation will fluctuate at 2.6% next year, ie higher than 2 , 2% which was its estimate in the September forecasts, with the unemployment rate falling to 3.5%.
As a result, Federal Reserve officials are predicting on average that the Fed reference rate should be raised from the current near-zero level of 0% -0.25% to 0.90% by the end of 2022, with increases to continue in 2023 raising the interest rate to 1.6% and then to 2.1% in 2024, in order to curb inflation and return close to the 2% target it has set.
The Federal Reserve added that the forthcoming interest rate hikes will now depend solely on the course of the labor market.
“With inflation hovering above 2% for some time, the Commission expects it will be appropriate to maintain ‘current near-zero interest rates until the labor market achieves full employment,’ the Fed said in a statement. identifies in more detail the “normalization” of the Fed’s monetary policy, after nearly two years of emergency support to the US economy amid the adverse effects of the coronavirus pandemic.
A situation that continues, as the new Omicron variant of the coronavirus intensifies the uncertainty about the course of the economy.
However, the Fed said economic growth next year is expected to reach 4%, meaning the economy will run faster than the 3.8% forecast in September.
Economists and investors, however, are also waiting for the scheduled speech of the Fed President, Jerome Powell, at 9:30 Greek time, where he is expected to further clarify the new monetary policy statement of the Federal Bank and answer questions about the US economic outlook.
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Source From: Capital
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