“I am supportive of moving toward a tapering process sooner rather than later. When exactly that happens, the committee needs to decide. I would hope sometime this year we would be able to start the tapering process,” told Philadelphia Federal Reserve Bank President Patrick Harker in a Nikkei interview, per Reuters.
Cleveland Federal Reserve Bank President Loretta Mester said on Friday that she would still like to begin tapering asset purchases some time this year despite the weak August jobs report, per Reuters.
Atlanta Fed President Raphael Bostic does not expect a call on tapering at this month's FOMC meeting but he believes the US central bank will be able to taper later this year, the Wall Street Journal (WSJ) reports on Thursday.
Powell surprised by signaling taper announcement could come in November. Tapering may end by mid-2022, opening the door to earlier rate hikes. Powell's comment on employment goal "all but met" is a significant hawkish shift.
Tapering is coming – it "may soon be warranted," according to the statement that has just been released by the Federal Reserve. Moreover, nine members now see interest rates rising in 2022 – up from seven last time.
As widely expected, the FOMC did not make any major policy changes at today's meeting. The decisions to keep the target range for the fed funds rate unchanged as well as the pace of asset purchases was unanimously supported by all 11 voting members of the Committee. The FOMC acknowledged that "progress" has been made toward reaching the Committee's goals of maximum employment and price stability.
Has the Fed merely kicked the can down to its next meeting? While markets had expected the world's most powerful to refrain from any hint about reducing its $120 billion/month bond-buying scheme, this July meeting may have included a longer pause than expected. It is "a ways off."
As widely expected, the FOMC made no substantive policy changes at today's meeting. The Committee maintained its target range for the fed funds rate between 0.00% and 0.25%, and it kept its monthly pace of asset purchases unchanged. But the FOMC raised its inflation forecast considerably for 2021, and most members see the risks to inflation as skewed to the upside.
The hawks are awakening – that seems to be the message from the Federal Reserve's "dot plot," causing jitters in markets and supporting the dollar. The Fed has released new economic forecasts, and there are now more members foreseeing a rate hike in 2023.
EUR/USD is trading around 1.17, struggling to rise amid the close German elections. The safe-haven dollar dropped earlier as the Evergrande crisis eased. US Durable Goods Orders and a speech by the ECB's Lagarde are eyed.
GBP/USD is trading at around 1.37, benefiting from the upbeat market mood and last week's BOE hawkishness. Brexit-related shortages of petrol in the UK hurt sterling earlier.
The US consumer belied predictions that a slowing economy would cut into Retail Sales in August. Instead of falling 0.8% as forecast, sales jumped 0.7%. Sales outside of the production crippled auto sector were even stronger.
Gold is easing off the higher levels, as the risk-on market environment amid ebbing China Evergrande fears and US stimulus optimism dulls the safe-haven appeal of the bright metal.
A few months after the cryptocurrency mining ban in China, the country issued another update last week, reiterating that digital assets are banned and crypto exchanges are prohibited.
With a pre-set regularity, a nation's Central Bank has an economic policy meeting, in which board members took different measures, the most relevant one, being the interest rate that it will charge on loans and advances to commercial banks.
In the US, the Board of Governors of the Federal Reserve (FED) meets at intervals of five to eight weeks, in which they announce their latest decisions. A rate hike tends to boost the local currency, as it is understood as a sign of a healthy inflation. A rate cut, on the other hand, is seen as a sign of economic and inflationary woes and, therefore, tends to weaken the local currency.
If rates remain unchanged, attention and also main news and analysis turn to the tone of the FOMC (Federal Open Market Committee) statement, and whether the tone is hawkish, or dovish over future developments of inflation.
The Federal Reserve System (Fed) is the central banking system of the United States and it has two main targets or reasons to be: one is to keep unemployment rate to their lowest possible levels and the other one, to keep inflation around 2%. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors, partially presidentially appointed Federal Open Market Committee (FOMC). The FOMC organizes 8 meetings in a year and reviews economic and financial conditions. Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Fed official website, on Twitter and Facebook
Jerome Powell
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31,
2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury
under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
Jerome Powell Fed's Profile and Wikipedia
The World Interest Rates Table reflects the current interest rates of the main countries around the world, set by their respective Central Banks. Rates typically reflect the health of individual economies, as in a perfect scenario, Central Banks tend to rise rates when the economy is growing and therefore instigate inflation.
