Fed holds rates steady, but raises inflation expectations sharply and makes no mention of taper
Source: CNBC
The Federal Reserve on Wednesday sharply raised its expectations for inflation this year and brought forward the time frame on when it will next raise interest rates.
However, the central bank gave no indication as to when it will begin cutting back on its aggressive bond-buying program, leaving investors to watch for Chairman Jerome Powells press conference on clues about when tapering will begin.
As expected, the policymaking Federal Open Market Committee left its benchmark short-term borrowing rate anchored near zero. But officials indicated that rate hikes could come as soon as 2023, after indicating in March that it saw no increases until at least 2024. The so-called dot plot of individual member expectations pointed to two hikes in 2023.
Though the Fed raised its headline inflation expectation to 3.4%, a full percentage point higher than the March projection, the post-meeting statement continued to say that inflation pressures are transitory.
Read more: https://www.cnbc.com/2021/06/16/fed-holds-rates-steady-but-raises-inflation-expectations-sharply-and-makes-no-mention-of-taper.html
IronLionZion
(45,433 posts)as supply adjusts to the demands of reopening economies around the world.
It's strangely satisfying to see conservatives blaming Biden for all this. As things get better next over the next year we should have momentum going into the midterm elections.
The Mouth
(3,149 posts)Inflation is a killer to those on fixed, or slowly rising incomes.
It's great for people at the beginning of their careers who buy a house, since the payments end up being much less as their income rises. It really sucks hard for those who are retired or in jobs with little chance of raises.
Nothing but nothing could hurt us more in '22 and '24.
Politicub
(12,165 posts)The global economy was shuttered for more than a year. The U.S. did a remarkable job of making it so our economy didn't implode.
Of course there are going to be unexpected things like inflation going up. We are in new territory, and no one is an oracle. It takes time for economic decisions and law to ripple across our vast economy.
Things could be so much worse... beyond imagination.
IronLionZion
(45,433 posts)maybe it's wishful thinking. I expect homebuilders, lumber, global supply chains, microchips, etc. will increase production where they can because of the high prices now and then normalize by next year. Change takes time to implement.
Housing in many big cities got cheaper last year as people fled to suburbs. This was true for the apartment/condo market.
Yavin4
(35,437 posts)Supplies may be artificially limited.
Deminpenn
(15,284 posts)income COLAs. Further, the very low interest rates on bonds that retirees/fixed income recipients often rely on to supplement income will rise when the Fed increases its interest rates. This will help as well.
OneCrazyDiamond
(2,031 posts)Swing voters can be a little forgetful.
Yavin4
(35,437 posts)Who saw a pandemic coming for 2020?
OneCrazyDiamond
(2,031 posts)roamer65
(36,745 posts)Meh.
If inflation gets that bad, just move the zeros two decimal places and rename the currency just like Brazil has done in years past.
All paper money eventually returns to its intrinsic value...zero.
-Voltaire.
Yavin4
(35,437 posts)pandemic. Globally, re-openings are happening in a haphazard manner. For example, the U.S. is practically fully open, but Canada is still under heavy restrictions. This creates unusual high demand in one place while supply may be shuttered in another. The answer is aggressive vaccinations so that the global economy can fully re-open and global supplies can meet demand.
The U.S. and the G7 need to take a stronger lead on getting the world vaccinated.