Last minute … the Fed has announced its important interest rate decisions

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The Federal Reserve Board (FRB) has raised the interest rate range to 0.25-0.50%. The Fed decided to raise rates with an 8 to 1 vote. Meanwhile, growth forecasts for the US economy are changing. Growth forecasts for 2022 have fallen by 30% from 4% to 2.8%. Growth was maintained at 2.2% in 2023 and 2% in 2024. Long-term growth expectations remained at 1.8%.

According to key data, the US economy grew 7.0% in the fourth quarter of 2021. The final results of the growth will be announced on March 30th.

Last minute: Gold prices fluctuated after the Fed

Every three months, 17 Fed officials make long-term forecasts of US unemployment, inflation, economic growth and interest rates over the next three years.

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St. Louis Fed President Bullard voted in favor of raising 50 basis points. The Federal Reserve has signaled six rate hikes for the rest of the year.

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The increase will continue

The Commission’s statement emphasized that the Fed is ready to adjust its stance in case risk is avoided, using the phrase “it is expected that it is appropriate to continue raising target interest rates.” did. In the long run, the Commission will not be able to meet its goals, including maximum employment and an inflation target of 2%.

Reduce balance sheet

The statement emphasized that the Fed hopes to begin shrinking its balance sheet, which has reached $ 9 trillion “at the next meeting.”

Unemployment rate estimates have not changed

Federal Reserve officials have not changed their unemployment expectations for this year and next year.

According to the Federal Reserve’s Economic Forecast Report, unemployment forecasts were only 3.5% this year and next. The 2024 forecast was raised from 3.5% to 3.6%, but the long-term unemployment forecast remained at 4.0%.

As of February, the US unemployment rate was announced at 3.8%. The unemployment rate reached a historic peak of 14.7% in April 2020, when the impact of COVID-19 peaked.

Every three months, 17 Fed officials make long-term forecasts of US unemployment, inflation, economic growth and interest rates over the next three years.

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The details of the FOMC minutes are as follows:

* Russia’s occupation of Ukraine causes enormous humanitarian and economic difficulties, and while the impact of the occupation on the U.S. economy is uncertain, it could put further upward pressure on inflation and economic activity in the short term. I have.

* Economic activity and employment indicators have continued to recover, and the unemployment rate has fallen sharply in recent months.

Powell: Inflation far beyond your goals

Federal Reserve Chair Powell said in his press statement after the decision that the size of the balance sheet is expected to shrink.

Powell’s statement is as follows, saying that the US economy is very strong.

The labor market is incredibly tight. Labor demand is very strong and its supply is restrained. FOMC members expect the labor market to remain strong. Inflation continues to be well above target.

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“Avoid increasing uncertainty”

Supply shortages are larger than expected and persistent. Russia’s attack on Ukraine has increased inflationary pressure. It will take longer than originally expected for inflation to return to its target. Energy prices increase pressure on US inflation. At one of our next meetings, we will start shrinking our balance sheet. The impact of Russia’s invasion of Ukraine is fairly uncertain. Balance sheet shrinkage plays an important role in monetary tightening. However, avoid increasing uncertainty.

“It is absolutely possible to move faster throughout the year.”

Pay more attention to the risk of rising inflation. The FOMC is determined to restore price stability. The likelihood of a recession is not extremely high. The economy is poised to withstand monetary tightening policies. The economy is in a good position to deal with rate hikes. If we think it is appropriate to reduce support for the economy faster, we are ready to take a step in this direction. All meetings will be held live and these steps will be explained. Each meeting evaluates the development status. If it is appropriate to move faster, we will. Sure, it could move faster this year. We maintain the view that inflation will fall in the second half of the year. Inflation is expected to remain high until mid-year.

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“It’s a clear time to raise interest.”

FMOC understands that it is time to raise interest rates and shrink its balance sheet. Obviously, it’s time to raise interest rates and shrink the balance sheet. The FOMC recognizes the need to return to price stability. How much inflation goes down is related to factors outside our policy. We aim to lower the monthly inflation rate by raising interest rates and tightening monetary policy. Tightening monetary policy not only curbs inflation, but also lags behind and impacts growth. This will be seen further in 2023 and 2024.

“They may have seven interest increases.”

There are seven meetings this year, with the possibility of seven rate hikes. We have not decided whether to raise rates ahead of schedule or continue throughout the year. Make a decision by looking at the rate hike data. If inflation indicates that interest rates should rise faster, we do. There are tools you need to fight inflation and use them. We plan to steadily raise interest rates throughout the year. Take measures to prevent high inflation from taking root. Narrow your balance sheet so that high inflation does not take root and is not permanent.

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The FOMC feels an obligation to restore price stability. Shrinking the balance sheet also tightens monetary policy. Wage increases are expected to decline. The FOMC uses all the tools at its disposal to prevent inflation from ossifying.

We expect to slow down demand, keep up with supply, and curb inflation. We are ready to use free tools to restore price stability. We expect the labor supply to increase as the Kovid-19 epidemic is left behind, and we hope that rising wages will increase the labor supply.

Kuwait monitored and raised interest in the Fed

Kuwait Central Bank (CBK) has raised interest rates by 25 basis points. According to a CBK statement, the discounted interest rate has been raised from 1.50 percent to 1.75 percent.

CBK’s interest rate decisions followed the Federal Reserve’s decision to raise interest rates by 25 basis points. Interest rate determination will be effective from tomorrow.

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