The US central bank, the FED, announced the highly anticipated interest rate decision. The Fed kept the interest rate constant in the range of 0 – 0.25, in line with expectations. While the Bitcoin price suddenly rose and then regressed with the FED’s decision, the gold price first regressed and then returned to its former position. Since the decision has been priced before, it has not created a serious change in the markets for now. The focus, however, will be on Fed Chairman Jerome Powell’s speech. Jerome Powell is holding a press conference half an hour after the verdict. Eyes on Jerome Powell’s statements… As Somanews, we have compiled the details for you, let’s examine the subject together… The article will be constantly updated with the new statements of the FED Chairman. Update the page constantly so you don’t miss the explanations!
Fed Chairman speaks: Here are Jerome Powell’s statements
The US central bank, the Fed, announced its expected interest rate decision. The Fed kept the interest rate constant in the range of 0 – 0.25. However, it was stated in the resolution text that it would be appropriate to start interest rate hikes soon. In addition, it was stated that the operation to reduce the balance sheet would follow the tightening. In the text of the decision, it was announced that the asset purchase operation will be completed at the beginning of March. In the text, it was also emphasized that the risks continue due to the new Covid variants regarding the economic outlook, while the economy and employment are strong and the employment gains are solid.
FED decisions came in line with market expectations. Gold and Bitcoin price suddenly dropped with the FED decision, then recovered. Now, Fed Chairman Jerome Powell is speaking. FED Chairman Jerome Powell is holding a press conference half an hour after the announcement of the interest rate decision. Jerome Powell’s first statements are as follows:
In an environment of rising inflation and a strong job market, our policy adapts itself to the evolving economic environment. Economic activity expanded strongly last year. Fiscal and monetary policy support also showed us that the economy is resilient, along with the healthy financial conditions of households and businesses.
Stating that the rapid increase in Covid-19 cases in the recent period will suppress economic growth downwards in this quarter, Jerome Powell stated that due to the epidemic, expenditures in the restaurant and tourism sector have decreased and activities will be affected due to the disease in general. However, referring to the fact that the health experts stated that the Omicron variant does not have as severe effects as the previous variants, the Fed Chairman emphasized that in case of such a progress, the economic effects of the epidemic will also decrease and thus a faster growth will be achieved.
Highlights from Fed Chairman Jerome Powell’s speech,
Fiscal policy will be less supportive of growth this year, helping to rein in inflation.
Current conditions support us to move faster in shrinking the balance sheet than in the last cycle.
We will shrink the balance sheet in a predictable way, the main instrument of monetary policy will be interest rates.
We will be discussing all the details of the balance sheet reduction in the upcoming meetings.
We intend to raise interest rates in March.
There is quite a bit of room for raising interest rates. We can push rates up without undermining the job market. Our fiscal policy will be less supportive of growth this year. We will work to ensure that higher inflation is not permanent and we will use all our tools.
The Fed’s communication with the markets is effective.
There is a different economy from the previous tightening cycle, we will adjust the monetary policy according to the conditions.
The economy no longer needs strong support, it’s time to stop asset purchases.
Fed’s balance sheet is bigger than it should be, we will start when we deem it appropriate to narrow the balance sheet, I can’t give more information at the moment.
Inflation risks still to the upside.
Meanwhile, the US 10-year bond yield, which was 1.7779% before the Fed decision, rose to 1.8494% after Jerome Powell’s statements. In addition, the US 2-year bond yield, which was 1.0253% before the Fed decision, rose to 1.0848% after its statements.
Inflation may remain high for longer than expected.
We have not decided on the amount of rate hikes.
If inflation worsens, monetary policy adjusts accordingly.