Speaking of U.S. debt rates, the recent finally attracted the attention of the Federal Reserve, Governor Lael Brainard said that has noticed the bond turmoil last week; San Francisco Federal Reserve Bank President Mary Daly believes that the Federal Reserve may change the duration of the purchase of bonds, or even as before, to take a “reversal operation”, that is, to sell short-term bonds and buy long-term bonds.
Steven Blitz, chief U.S. economist at TS Lombard, a research firm, believes that the Federal Reserve’s quantitative easing policy this Time, under the premise of keeping interest rates low, the concern is not Inflation, but in the search for economic acceleration, the growth of loans from commercial banks is slowing.
By the Federal Reserve Board recently released data, net of mortgage loans, commercial bank loans increased by about 5% year-on-year, which is lower than the level of up to 10% in April last year.
Blitz pointed out that the Federal Reserve can not always protect the market from the U.S. national debt growth rate exceeds the impact of nominal gross domestic product (GDP) on the cost of financing. The U.S. economy is currently below the equilibrium interest rate level, but higher reserves and broader capital constraints mean that it is impossible to rely on increased bank lending to drive economic growth.
He believes that inflation will not rise sharply next, and core personal consumption expenditures will only grow 1.3% in Q4 and 1.7% next year. The potential $1,400 handout and vaccinations are expected to boost the economy at this stage, but growth will be reduced to a relatively modest 4.5% in Q4, and will slow to 2.8% next year.
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