Urgent: The Federal Reserve statement is issued, here are the main points

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Wednesday, October 13, 2021 - 18:29
Point Trader Group
Urgent: The Federal Reserve statement is issued, here are the main points

The Fed released the minutes of its last meeting, in which it indicated the possibility of monetary policy tightening soon.

Most notably:

- The dot-plot chart, which represents the opinion of members of the Open Market Committee - indicated that the interest may rise during the next year 2022, despite Powell's assertion that the interest will remain close to zero for as long as possible, to ensure a full recovery.

- The minutes of the committee also indicated that the members feared the strongly high inflation. GDP forecasts for this year have been slashed, and members expect the unemployment rate to be lower than initial estimates. Goldman Sachs had indicated earlier in the day that the biggest risk to the US economy is high inflation.

During the last meeting, all members voted to keep the interest rate in the range of 0.00% to 0.25%, and to keep the bond-buying programs stable at 120 billion dollars for the time being.

- Quote from the minutes: “Members indicated that if the bank makes a decision about reducing purchases during the next meeting, the tightening process may start “tapping” with monthly purchases in mid-November or mid-December.

The Federal Reserve aims to finish tightening monetary policy of $120 billion per month, earmarked for bond purchases, by mid-2022, i.e. by reducing $15 billion per month.


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