Markets are betting that the Federal Reserve, next week, at the meeting on Wednesday, June 16, he will keep his accommodative monetary policy. THEbesides the central bankers, later the sharp rise in consumer prices in the United States, which in May they have recorded a jump of 5%, the largest since August 2008, will come targeted on when they will start the discussion on the start of the tapering, that is, on the start of the withdrawal of monetary stimuli.
Since last year, the Fed he kept his interest rate overnight close to zero and has purchased at least $ 120 billion a month in Treasury bills and mortgage assets. Nothing should change soon, but we wonder on when the US central bank intends to start discussions on the beginning of the withdrawal of monetary stimuli. The most likely window is September but that’s not necessarily the case Jerome Powell want to be unbalanced in this sense.
However, central bankers will have to discuss the price overheating and what could happen is that the Fed next week you start to recognize that US inflation will not be as transient as previously thought. According to Wall Street Journal, this debate could prompt them to “start talking about easing bond purchases.”
Although, as the same note WSJ, a slowdown in the purchases of mortgages and government bonds by the Fed, which should be the first step in any gradual downsizing of its accommodative monetary policy, is something the Fed chairman, Jerome Powell he has repeatedly said that he is not in a hurry to do so. In short, it is not yet clear what the Fed will do, probably nothing relevant, even if inflation and the tapering will be the two most popular themes on the Fomc table, the institute’s monetary policy committee.
There speed of vaccinations in the US, in fact, it is doing take off the recovery, which, in turn, did prices soar. “The intensity of the current inflation and the current bottlenecks in supply chains and the labor market are greater than I expected,” he told al. WSJ the former vice president of the Fed, Donald Kohn, adding that he still shares the central bank’s belief that the recovery in inflation is temporary, even if he begins to have some doubts too: “It could also be – he explains – that the balance between supply and demand will not be corrected as easily or comfortably as the Fed and I expected earlier. “