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Inflation was at its highest level in 30 years, and improving employment markets helped the central bank of the United States conclude its stimulus package and raise interest rates faster than expected.
The minutes of the latest meeting of the Federal Reserve Board, released last night, are: A few Given the high inflation rate in the United States, which reached 6.2% last month, policy makers are moving towards ending bond purchase schemes sooner.
The Fed began shrinking its $ 120 billion monthly asset purchase scheme this monthSave $ 15 billion a month. At this rate, it will end by June next year.
However, the minutes do give a clear hint that tapering can be speeded up.
“Various participants adjust the pace of asset purchases faster than participants currently expect if the (policy-setting) committee continues to raise inflation above a level consistent with the committee’s objectives. He said he needed to be prepared to raise the federal funds rate target. “
Given supply chain issues and pandemics, more dovish Fed members emphasized that they should take a “patient attitude” towards the incoming data.
Participants noted that the Commission would not hesitate to take appropriate action to address inflationary pressures that pose risks to long-term price stability and employment targets.
Earlier than expected, the Fed’s tightening policy outlook has weighed heavily on the pound and euro in recent weeks. Last night, Sterling reached its 2021 lows and traded at just $ 1.3325 against the US dollar.
The euro is even weaker, the lowest against the US dollar since July 2020 and nearly 21 months low against the pound.
The FOMC minutes suggest that the Commission’s pigeon is “retreating”, says Jeffrey Halley, Senior Market Analyst OANDA:
The Commission noted that short-term inflation expectations could exceed expectations, and faster tapering is not out of the question.
It’s probably the heaviest and last item on the market. Again, the currency market is a pressure relief, the US dollar soars again, Sticky German IFO [business climate survey]Fear of virus blockade and ECB officials pouring cold water on rate hikes.
Yesterday news U.S. unemployment claims plummeted to the lowest level since 1969 It could also encourage the Fed to tighten its policies sooner.
Deutsche Bahnk The Federal Reserve expects to push down the taper accelerator in December by doubling the reduction in US government debt (Ministry of Finance) and mortgage-backed purchase purchases.
As DB strategist Jim Reid explains, this completes the scheme three months earlier than planned.
This will reduce Treasury purchases by $ 20 billion each month. [up from $10bn] And MBS purchases $ 10 billion [up from $5bn], This will advance the end of the taper to March.
Along with that, they are pushing for a lift-off one month ahead of schedule until June 2022.
Something for investors to ponder. Wall Street is closed due to Thanksgiving, but European stocks are expected to open higher despite concerns about the fourth wave of Covid-19.
- Greenwich Mean Time 8:30 am: Swedish Central Bank Interest Rate Determination
- Greenwich Mean Time 9:30 AM: Weekly real-time indicator of economic activity and social change in the UK
- 11:00 am: CBI Divided Trade Survey of UK Retail Sales in October
Sterling near 2021 is low, as the Federal Reserve has hinted at a faster taper. Covid Wave hits German consumer confidence – Business Live | Work
Source link Sterling near 2021 is low, as the Federal Reserve has hinted at a faster taper. Covid Wave hits German consumer confidence – Business Live | Work