On March 22, the Fed's Federal Public Marketing Committee (FOMC) announced that it raised the federal fund interest rate target range between 25 basis to 4.75%and 5%, the highest level since October 2007.
According to US media reports, in the past few weeks, the chaos in the US banking industry has caused the outside world to worry about the Fed's interest rate hikes, and it has also made the Fed's task of fighting inflation. Some famous American economists have urged the Federal Reserve to suspend interest rate hikes.
Fed Chairman Powell passed three important information at the press conference.
I. Reducing the inflation rate to 2%is the long -term responsibility of the Federal Reserve. There is still a long way to go in this process. The Fed will reduce inflation as its important goal.
2. During the remaining time in 2023, the rate cutting is not within their basic assumptions.
Third, the prediction of the federal fund interest rate in 2023, maintaining the Federal Reserve ’s dot matrix in December last year, the medium value of the 5.1%interest rate of interest rates.This means that the Fed has only room for interest rates once this year.The Fed is about to end the interest rate hike cycle.
The Fed is worried that if the interest rate hike is suspended, it may exacerbate investors' concerns about the continuous spread of the banking crisis.
At the same time, Yellen, whose budget for the new fiscal year, said that the US government did not consider the scope of expanding federal deposit insurance.This is equivalent to denying the government's consideration on Tuesday to expand the insurance to the media news of all deposits.
The two news made U.S. bank stocks, especially banks such as the First and Bank of China, plummeted, and the decline spread to the entire market.
In the end, the three major index fell after two days of collective rising, the S & P closed down 1.65%, the Taoist closed down 1.63%, and the Nasda Index closed 1.60%.
As of the closing of Bank of America and Wells Wells, it fell 3.3%, Citi fell 3%, JP Morgan Chase fell about 2.6%, Morgan Stanley fell nearly 1.4%, Gao Sheng fell 1.1%.
In March, many banks in the United States closed, and the negative effects continued to spill.People in the industry generally believe that the Federal Reserve has continued to raise interest rates in the past year is one of the main reasons for the US banking system.
The interest rate hikes soared the US debt yields. The price of US debt assets purchased by financial institutions had previously purchased under low interest rate environments, and some banks' financial structure defects were prominent.At the same time, accelerated withdrawal of reasons for the storage households due to the hedging and pursuit of higher returns, which caused the bank's liquidity to deteriorate rapidly and trigger a crisis.
When asked if the Fed was worried about continuing interest rate hikes to further exacerbate the dilemma of the banking industry, Powell said that the Fed really focused on macroeconomic results.Effect.
Powell once again emphasized that reducing the inflation rate to 2%is at a cost, but the cost of keeping the inflation rate at a high level is more serious.
The Fed will reduce the median value of this year and next year's GDP growth rate of 0.1 and 0.4 percentage points to 0.4%and 1.2%, respectively. This year and next year's inflation expectations and core PCE price indexes have been raised by 0.1 percentage points to 3.6%each.And 2.6%.
As a result, some people believe that the Federal Reserve's measures may increase the pressure of the US economy in decline.
