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The global market ignores forecasts because the US FRS and many other central banks around the world are preparing to prevent financial easing. On Wednesday, the Federal Open Market Committee (FOMC) of the US Central Bank mentioned plans to gradually reduce quantitative easing (large monthly purchases) and complete the plan by March 2022. In addition, FOMC members decided to keep interest rates at zero, but they are expected to raise interest rates at least three times next year.
Fed outline and purchase reduction arrangements and interest rate hikes in 2022
Since the outbreak of Covid-19 in the United States, the US FRS has initiated an unprecedented financial easing policy. This move caused inflation to soar, and global analysts and economists have recently criticized the Fed’s choice. The Federal Open Market Committee concluded its two-day meeting on Wednesday, and the Central Bank also explained that it plans to reduce its bond purchase program to $30 billion per month by January. This month the Fed can use quantitative easing (QE) purchases of US$90 billion instead of the US$120 billion last month.
In addition to withdrawing from QE, FOMC members also jointly stated that financial institutions have plans to raise interest rates three times next year. It is expected that there will be three major interest rate hikes in 2022, two substantial interest rate hikes in 2023, and two more interest rate hikes in 2024. However, the Fed did not blame quantitative easing for rising domestic inflation, but pointed out that inflation is caused by supply and demand issues.
“The imbalance between supply and demand associated with the pandemic and the reopening of the economy continue to lead to higher levels of inflation,” the Federal Open Market Committee said on weekdays. More importantly, the aforementioned FOMC statement on Covid-19 and the new coronavirus variant has had a great impact on the US economy.
“Buy rumors, sell facts”: Global markets and Bitcoin rise after the FOMC meeting
Despite the announcement of the interest rate cut and revealed that it may raise interest rates three times next year, the Fed’s remarks and market reaction are contrary to expectations before the announcement of the interest rate cut. At the end of the Federal Open Market Committee meeting, the Nasdaq, the New York Stock Exchange and the stock index all rose. Fxpro senior analyst Alex Kuptsikevich (Alex Kuptsikevich) said in an interview with Bitcoin.com News that the Fed “holds the most hawkish fringe of market expectations” on Wednesday.
“The Federal Open Market Committee announced that it will double the pace of reduction,” Kuptsikevich said. “The committee’s latest forecast recommends three key interest rate hikes in 2022, although it is not expected to raise interest rates until just six months ago. We also found that due to rising inflation, the Fed’s target balance allows for the Start raising interest rates.”
“The Federal Reserve Chairman collectively called the currency plus valuation’upgrade’,” the analyst continued. “This may be a clear signal to harm the market, as he did in 2018. Throughout the meeting, Powell pointed out that, despite this, the Federal Open Market Committee did not agree on the timeline for the Fed’s record rate cut. In the end of the stimulus cycle, this was not a real problem at the beginning of the acceleration-the dollar index rose within the first few minutes of the FOMC, hit the 2020 calendar month high, and then turned back again, from the height at the time of writing Down 0.8%.”
Kupczkiewicz added:
“It feels like the market is ready to take risks and look forward to the Fed’s weakness, even though the Fed’s remarks have not compromised. Some commentators believe that we tend to see the classic “buy rumors, sell the facts” response. However, “growth” The rise in stocks largely shows that market sentiment has ended a strong year in a happy way. At the same time, a wave of profit-taking growth in the past six months seems to have begun, despite the fact that it has been compared with other central banks in the DXY basket. In comparison, the Fed’s position is much tougher.”
Even Bitcoin (BTC) was unexpected on Wednesday, because when the Federal Open Market Committee announced its tough plan, the value of Bitcoin went up a notch. Just before the end of the meeting, BTC changed hands at a price of US$46,590 per unit. When the FOMC meeting ended, the cost of BTC jumped to a high of US$49,420 on Wednesday afternoon (Eastern Time).
The Bank of England raises benchmark interest rates, European financial institutions maintain low interest rates, and the number of initial jobless claims in the United States is still higher than pre-pandemic levels
In addition to the FOMC meeting, the Bank of England (BoE) raised its benchmark interest rate from 0.1% to 0.25%. Nevertheless, no other central bank has done so, and European financial institutions, like FRS, have not broken the currently suppressed benchmark interest rate.
The European financial institution explained that it will not raise lending rates until inflation stabilizes. In addition, the weekly US idle claims announced by the Labor Party showed an increase last week. The Department of Labor’s report shows that idle applications are still much higher than pre-pandemic levels.
Post Global markets, when the Fed’s hawkish taper arrangements were announced, Bitcoin ignored expectations First appeared in Bitcoin wire.
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