The Federal Reserve Board shows that interest rates rise as inflation rises | Federal Reserve

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The Federal Reserve We are preparing to raise interest rates for the first time in March since the coronavirus pandemic struck the United States and tried to curb price increases.

The central bank has announced that interest rates will be close to zero for now after the last two days of meetings, but has indicated that it is preparing to raise interest rates at the next meeting.

At a press conference, the Fed chairman Jerome PowellThe central bank said it would continue to monitor the course of pandemics, inflation and unemployment, but gave his clearest signal that historic low interest rates in the United States would soon begin to rise.

“I think the Commission is keeping in mind raising the federal funds rate at the March meeting, assuming the conditions are appropriate,” Powell said. “The economy no longer needs sustainable monetary policy support,” he said.

When the coronavirus pandemic struck the United States in March 2020, central banks began to fund the economy by lowering interest rates to near zero and buying financial assets to stop a potential financial collapse. .. At this week’s meeting, the Fed Commission approved the final round of asset purchases. This will end the stimulus by March.

The Fed has two missions: maximizing employment and stabilizing prices.
Inflation has skyrocketed to 7% annually and unemployment has fallen 3.9%, approaching pre-pandemic levels in recent months. “There’s plenty of room to raise interest rates without threatening the labor market,” Powell said, suggesting that interest rates will be raised to curb inflation for months.

But the end of the Fed’s monetary easing policy has upset investors. The announcement reminds investors of the volatile stock market days when the federal government is concerned about the speed at which the era of easy funding ends and the impact of heightened tensions between Russia and Ukraine on the global economy. It’s a continuation.

U.S. stocks Market plunged on Monday and Tuesday Just to make up most of their losses. Nonetheless, by Tuesday the S & P 500 recorded the worst loss ever at the beginning of the year, with the once hot tech sector accounting for most of these losses. The US stock market recovered on Wednesday, but fell as Powell outlined the Fed’s plans.

The Federal Reserve Board shows that interest rates rise as inflation rises | Federal Reserve

Source link The Federal Reserve Board shows that interest rates rise as inflation rises | Federal Reserve

The post The Federal Reserve Board shows that interest rates rise as inflation rises | Federal Reserve appeared first on Eminetra.

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