The U.S. Federal Reserve (Fed) announced on the 27th that interest rate policy was on hold, providing plenty of support for the U.S. economy, which has fallen into weakness in recent months. But the market seems to be ungrateful, the U.S. stock market decline has been expanding, the Dow Jones once fell 700 points, or 2.3%; S&P 500 index from a record high fell 2.9%, the year’s gains all spit out.
In the first of the year, is also the first meeting after the inauguration of Biden as U.S. President, Fed officials agreed to maintain interest rates at the level of 0-0.25%, and continued to buy $120 billion of assets per month until the U.S. economy has made significant progress, reiterating the guidance from last September to date.
The Fed said in a post-meeting statement that economic activity and employment recovery has slowed in recent months, especially in industries hit hardest by the Epidemic, and that “weaker demand coupled with the earlier drop in oil prices have dampened consumer price Inflation.
The statement also said that the economic trend will depend largely on the development of the epidemic, including the progress of vaccination, the public health crisis “will continue to put pressure on economic activity, employment and inflation in the near term, the medium-term will bring considerable risk to the economic outlook.
Federal Reserve Chairman Ball said at a post-meeting press conference that there is still a long way to go to achieve the dual goals of employment and inflation. In addition, if inflation rises in the coming months, it will only be temporary; if U.S. inflation is found to rise, the Federal Reserve will remain patient and will not adopt a single solution.
Bauer believes that the U.S. inflationary momentum will not change in the short term, and he is more worried about the economic recovery than the rise in inflation.
Bauer also mentioned that all along, the U.S. government’s fiscal response to the economic slowdown has been strong and sustained.
Reporters asked about the relationship between the Federal Reserve and the new Treasury Secretary Yellen, Bauer said he would certainly maintain a good working relationship with Yellen, the two have not yet spoken on the phone, and he has not yet met President Biden.
Regarding the epidemic, Bauer said the U.S. is still quite a long way from herd immunization, and the epidemic will still pose a considerable adverse risk to the U.S. economy, and the most important job at the moment is vaccination.
He also said that the Fed could take more action on asset purchases if necessary; now is not the Time to discuss about scaling back the force of asset purchases.
He was reluctant to comment on the recent rise in stocks GameStop, saying only that the Federal Reserve was looking very broadly at financial conditions and also closely at the non-banking sector, while recent asset prices were driven by the progress of the new vaccine crown and many fiscal measures. As for house prices, Bauer also said it is unlikely to continue to rise sharply.
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