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The U.S. Federal Reserve’s March baby step preview… Some personnel insist that “interest rates must be raised by a larger margin”

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zoom inOn the 1st of this month (local time), US Federal Reserve Chairman Jerome Powell explains the background of the 0.25% point rate hike at a press conference. Washington = AP Newsis

At the Federal Open Market Committee (FOMC) meeting held three weeks ago, most of the US Federal Reserve (Fed) officials agreed to slow the pace of rate hikes with a ‘0.25 percentage point increase’, but some agreed that a rapid increase of 0.5 percentage point would be necessary. appeared to be necessary. A 0.25 percentage point increase was also suggested at the next meeting scheduled for March.

According to the minutes of the FOMC meeting released by the Fed on the 22nd (local time), “almost all participants agreed that a 0.25 point increase in interest rates was appropriate.” The reasons were “slowing the pace of rate hikes will allow us to better assess the (effect) impact on the economy” and “avoid the risk of tightening excessively than necessary.”

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These are the minutes of the FOMC meeting held over two days, January 31 and February 1. After implementing the giant step four times in a row (0.75% point increase) from June of last year, the Fed slowed the rate of increase with the big step (0.5% point increase) in December, and on the 1st of this month, the normal speed of the baby step (0.25% point increase). point increase). As a result, the US benchmark interest rate has risen to between 4.5% and 4.75%.

The baby step was decided by unanimous vote, but during the discussion process, some attendees insisted on the big step. “Participants supporting a 0.5 percentage point increase noted that a significant increase in interest rates would allow them to move closer to a sufficiently limited target more quickly,” the minutes said.

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Earlier, St. Louis Federal Reserve Bank (Fed) President James Vlad and Cleveland Fed President Loretta Mester announced through the media that they supported Big Step. Minutes released this time indicated that the Fed would raise the rate by an additional 0.25 percentage point at the FOMC meeting to be held on February 21 and 22.

The Fed’s minutes three weeks ago didn’t have much of an impact on the market, as hot employment, inflation and consumption data released in the three weeks since the FOMC ended earlier this month had a huge impact on the market. While the Fed has always stated that suppressing inflation is a priority, the market has been expecting a pivot (policy shift) called ‘rate cut’, but in the past three weeks, it is changing to believe in the Fed. According to the Chicago Mercantile Exchange’s ‘Pedwatch’, investors expect the Fed to raise interest rates to 5.4%, which is higher than the median rate (5.1%) this year, which was expected in December last year.

On the New York Stock Exchange (NYSE) on this day, the Dow Jones 30 Industrial Average fell 84.50 points (0.26%) from the battlefield to 33,045.09, and the Standard & Poor’s (S&P) 500 Index fell 6.29 points (0.16%) from the battlefield to 3991.05. finished On the other hand, the Nasdaq index rose 14.77 points (0.13%) to 11,507.07, successfully rebounding in 4 trading days, ending the market in a mixed fashion overall.

Meanwhile, at the last FOMC meeting, officials from the Federal Reserve expressed concern over the prolonged discussion of the US debt ceiling. “A significant number of attendees were concerned that the slow congressional debate to raise the debt ceiling could pose serious risks to the financial system and the broader economy,” the minutes said.

New York =

Source: Donga

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