Federal Reserve officials have kept near-zero interest rates unchanged and expect the first rise to take place no earlier than in 2023, despite the improved economic forecasts.
Concerns about rising US inflation have been noted. Some committee members have previously pointed to the likely need to influence financial conditions in response to rising government bonds yield. Jerome Powell pointed out that this is a minority opinion, thereby reassured investors. The S&P 500 and Dow Jones have surpassed March highs in a moment, and the 2-year bonds yield fell from 0.15% to 0.13%. The dollar index lost just over 50 points, dropping to 91.36.
"The majority of the committee members are unwilling to raise rates during this forecast period,"Powell said at a virtual press conference, adding that the time to talk about a cut in asset purchases by the central bank "has not yet come."
The Fed expects the spike in inflation this year to be short-lived. The price pressures indicator is projected to decline to 2% in 2022, after jumping to 2.4% in 2021. Excluding food and energy resources, inflation is projected to reach 2.2% this year and fall to 2% in 2022. The forecast for GDP growth was raised to 6.5% from 4.2% at the December meeting, while the forecast for unemployment was decreased by 0.5% to 4.5%.
The Federal Reserve holds the course with its ultra-soft monetary policy and it seems like there won’t be any changes in the nearest time.
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