The Fed was slow to respond and reported three high rates in 2022, Powell said she had not seen cryptocurrencies pose a financial risk.

On the afternoon of December 15 EST, the Fed concluded its most important meeting of the year. Highlights from the meeting and remarks from Powell.

Overview of the importance of the meeting of interests:

The dot matrix forecast released on Wednesday showed that 12 of the 18 FOMC members are expected to increase at least three times next year, which is higher than the September forecast. Interest rates at least once in 2022. The Fed also plans to hike rates twice in 2023 and twice as much in 2024.

The Fed has lowered its GDP forecast for 2021 and is forecasting 5.5% GDP growth this year, lower than the 5.9% growth it forecast at its September meeting.

Bank of America is raising its financial position for the years 2021, 2022 and 2023, forecasting financial growth this year to 5.3%, down from 4.2% previously.

The Fed kept interest rates unchanged, accelerating the cuts and reducing its monthly asset balance to $ 60 billion.

rising price or soon

Fed officials expect the Fed's interest rates to rise to 0.9% in 2022, above its September estimate of 0.3%.12 FOMC members must increase their rates at least three times next year. In 2022, five members will increase their interest rates twice and each member will increase their interest rates once.

This was higher than in September, when half of the Fed's members believed prices would rise at least once in 2022. President Powell said inflation could be slow. As interest rates rise, the next challenge for the Fed is to reduce the size of its bonds.

The banking sector now expects real GDP growth of 5.5% in 2021, below the 5.9% forecast at the September meeting.

The Fed has also raised its fiscal forecast for this year, 2022 and 2023.This year's inflation rate is expected to reach 5.3%, down from 4.2% previously. The median bank has raised its forecast for an increase in the PCE 2022 rate to 2.6% from 2.2%. Inflation projections for 2023 have also increased slightly.

Core PCE inflation forecast for 2021 will be 4.4%, above the 3.7% forecast in September. Key PCE values ​​are projected at 2.7% in 2022 and 2.3% in 2023. This is higher than estimates of 2.3% and 2.2% in September.

The bank expects unemployment to fall to 4.3% this year, from a previous estimate of 4.8%.

Control the base rate and accelerate the balance sheet

The US Federal Reserve (Fed) announced on 11 (local time) that it would temporarily keep US interest rates unchanged at the current level of 0. -0.25%.

Bank of America first announced it would "cut back" on its monthly asset purchases in November and said it would do so on Wednesday. Starting in January, the Fed will cut US Treasury purchases by $ 20 billion and repayment loans by $ 10 billion. As a result, the monthly limit for US Treasuries will be $ 40 billion, and for repayment loans, $ 20 billion. That's half of what it had before the November slump, and $ 30 billion less than the contract it would be in December.

At this rate, Powell said the Fed is holding two meetings before the stimulus package ends. The next two meetings will be held in January and March 2022. However, a statement released on Wednesday said the central bank has the right to change the exchange rate and buy monthly returns if companies need to.

Details of Powell's remarks

1. Don't worry that cryptocurrencies threaten the financial security of the United States.

In a question-and-answer interview, Powell said access is dangerous without assistance and there are many options. However, it is believed that current cryptocurrencies will not pose a risk to the financial security of the United States, and the use of these securities requires careful monitoring. "If managed well, stablecoins can be profitable and profitable for consumers as part of a financial system. Not now. They can, especially those plugged into one of the largest technological devices." , did he declare. He also said: "There are large out-of-the-box payments, but there may not be proper care and protection in place. Citizens in particular depend on the government and the people. The Federal Reserve is ensuring that that payments are safe and reliable. "

2. The new omicron plastic deformation is dangerous, but does not affect the shear rate.

President Powell has said the Covid Omicron divergence poses a risk to industry growth but will not affect the bank's medium-term downside plans. “There is a need to remove the cut for a few months,” said Powell. "Omicron has nothing to do with it." However, the Fed chairman noted that the impact of this change on public health and the economy is uncertain. Powell added that Americans have become increasingly attached to the novel coronavirus, especially as vaccines increase, and the financial impact of Oh Micron "depends on how he holds up. How much he is worth. better not to give up. ”This change affects inflation, growth or performance.

3. The market economy has developed rapidly.

President Powell said the stock market was recovering quickly and the economy continued, but the threat of inflation was greater. Powell said, “The economy is now stronger, closer to full employment and inflation is higher than expected,” Powell said. So President Powell said the Fed does not expect a significant delay in reducing asset prices and raising interest rates. However, he noted that the Fed had not paid attention to the precise moment of the rate hike.

4. Inadequate work is real and the return to work "will take longer"

President Powell said unemployment was "very low" but labor market participation was "disappointing". He said: “Sure, last fall - I think we'll see more staff involvement as insurance coverage wears off, vaccinations go up and schools come down.” It will take longer. to repair the staff. He added that market participation may return after a significant downturn in the last cycle. But this time things were different. “This cycle will be different due to its small size and high staff. The point is that there are no strong staff to participate in the return, at the same time we have to develop policies and procedures. “This is something we have to think about in terms of inflation. Far beyond our target.

5. The Fed's plan to cut costs has nothing to do with byelections

In the past, conspiracy theorists believed Powell changed his stance on inflation to persuade him to re-elect Biden as the head of a mid-sized bank. President Powell said the Fed's emergency exit had nothing to do with his re-election. It is not a coincidence. The president talks about making faster decisions before making a decision ... We will do what we think is right, and always do what I think is right for the business and the people. "

vaccine industry

Financial markets were positive and US commodities rallied on Wednesday. The Dow Jones is up 1.1% and the S&P 500 is up 1.6%. The Nasdaq Composite gained 2.2%.

According to data from Push Terminal, Bitcoin, the largest cryptocurrency market by capitalization according to the press release, was around $ 48,700, up 2% in 24 hours, and Ethereum by 5%, up to $ 4,000.

specialized content

Chris Zaccarelli, chief investment officer of the Independent Advisors Alliance, said the Fed sees the rise in inflation as more important than its operational targets.

“In fact, the market has welcomed the Fed's vote of confidence in the economy over the past year and a half rather than the support measure,” said Mike Loewengart, chief investment officer. Good E-Trade investment.

Tom Lee, Managing Director of Fundstrat, said: “I think the 'dressings' are growing. The market is waiting for this. The gossip is sold out and now is the time to buy. I am very optimistic at the moment. "

Mark Cabana, short-term director of short-term interest rates at Bank of America, said the Fed's message was firm: “The decision needs to be made sooner. But what really matters is where and how the economy changes. you look at the comments before the meeting, it will be next year, "he said, adding:" We just argued that 'interest rates have doubled'. I believe they can control inflation with the Fed. Story. ".