Interest rates in the United States will not change in the near future – said Jerome Powell, head of the Federal Reserve, at a press conference. Thus, the main rate is still in the range of 0-0.25 percent.
–
However, the situation may change soon. “In light of the remarkable progress we have seen in the i and labor marketnflation, which is well above our long-term target of 2%., the economy no longer needs constant monetary policy support at a high level “- pointed out the Fed president.
–
He then added: “That is why we are withdrawing our asset purchases, and we expect it will soon be necessary to raise the target range for the federal funds rate. Of course, the economic outlook remains highly uncertain. Conducting an appropriate monetary policy in this environment requires humility, because we see the economy evolving in unexpected ways. “
–
The Fed restricts the purchase of securities
As of February, the Federal Reserve will be increased its holdings of treasury securities by at least USD 20 billion per month. And mortgage-backed securities of at least $ 10 billion per month.
–
“When deciding to reduce our balance sheet, we are guided by our goals of maximum employment and price stability. Accordingly, we will be prepared to adjust every detail of our approach to balance sheet management in the light of economic and financial developments,” declares the Fed president.
–
—
On the other hand, the FOMC did not take decisions on the specific schedule, pace or other details of the balance sheet reduction. He will discuss these issues at future meetings.
–
See also: A new wave of inflation. “Prices will go up, but much slower”
—
How will US interest rates change?
“To provide more clarity on our approach to reducing the size of the Federal Reserve’s balance sheet today, the commission released a set of guidelines that will form the basis of our future decisions. These rules explain that the federal funds rate is our main way of adjusting monetary policy, and that the reduction of our balance sheet will take place after the start of the process of raising interest rates – said the head of the Fed.
–
—
The reductions, Powell announced, will occur in a predictable manner over time, mainly through corrections through reinvestments. “Over time, we intend to hold the securities in the amounts necessary for the operation of our large reserve, and in the longer term, we expect to hold mainly Treasury securities” – added.
–
And to answer the question whether the Fed can raise interest rates at each subsequent meeting, Powell said, “It is impossible to predict with certainty exactly which foot path will be the right one. At the moment we have not made any decisions on the policy path and I emphasize that we will be humble and flexible about it, we will navigate through different opposing currents, the risks are now directed both ways, “he said.
–
—
“I would like to add that we will also be guided by data (…) and changing perspectives” – he added.
–
