Fed rate decision shifts to hawkish more officials predict early rate hikes

The U.S. Federal Reserve Board (Fed) resolution on the 17th, maintaining the existing monetary policy unchanged, and until the end of 2023 the federal funds rate range will be maintained at 0 to 0.25% level, Chairman Ball also reiterated the dovish position, but the interest rate forecast point chart shows that more officials predict that interest rates will be raised earlier, so that this decision reveals “doves with hawks “The meaning of the Fed’s position is gradually shifting to the “hawkish”.

However, the Fed sharply revised economic forecasts to 6.5%, will make the “dovish” policy stance to face challenges, will also make the market for the Fed to withdraw from the easing of the timing of a more intense controversy. The U.S. 10-year bond yield rose above 1.7% in the 18th session.

Fed reiterated the $120 billion monthly asset acquisition force unchanged, until the economic situation appears substantial progress.

Fed also revised the U.S. economic growth rate to 6.5% this year, the highest since 1983; personal consumption expenditure (PCE) Inflation rate is expected to rise to 2.4% this year, but next year will fall to 2%, meaning that officials believe that inflation is only a temporary phenomenon; unemployment rate is expected to fall to 4.5% by the end of this year, next year will fall below 4%, showing a more optimistic economic outlook.

Interest rate dot plot shows that most officials still predict that the current ultra-low interest rates will last until at least the end of 2023, however, among the 18 officials, seven predicted that interest rates will rise for the first Time in 2023, more than the five in December last year, and four predicted that interest rates will begin to rise next year, also more than the one in December last year.

Bauer said that policy officials will patiently remain loose, it is not the time to start discussing the tightening of the bond purchase program; the conditions for raising interest rates is to maximize employment, the inflation rate must reach 2%, and not just temporarily reach the level; if you really want to tighten policy, will notify all sectors as far in advance as possible. He said that the stronger economic forecast alone is not enough for the Fed to withdraw support from the economy, but to see economic data reflecting economic improvement before counting.