March Fed Minutes: ‘Many’ Officials Prefer Great Increase

Minutes from the March Federal Reserve meeting show that central banks are planning to reduce their bond yields soon as they raise interest rates “urgently,” as central banks try to curb economic growth and inflation.

Fed officials are making more money to borrow and use it to reduce buying and selling business, hoping the lower demand could help reduce prices, which are now rising sharply in the next four decades.

Central banks raised interest rates by a third of March, their first increase since 2018 – and minutes suggest that “many” officials would prefer a larger move and were repulsed by the uncertainties linked to the Russian invasion. Ukraine. Markets now expect the Fed to halve in May and possibly June, although they begin to withdraw financial aid by reducing their spending.

The site represents about $ 9 trillion – swollen and responding to the epidemic – and Fed officials are planning to reduce it by allowing their government-sponsored funding to expire from May, minutes show. This helps to increase interest rates, which in turn can lead to slower growth, lower unemployment rates and higher wages. Ultimately, the theory goes, in which chain reactions help to reduce prices. “They are very determined to fight inflation and inflation,” said Kathy Bostjancic, a US economist at Oxford Economics. “They are affected.”

Although central banks were reluctant to take action due to a sharp rise in prices last year, expecting it to become “temporary” and quickly disappear, expectations have been dashed. Rising prices remain high, with officials carefully monitoring the signs to indicate that they may be permanent.

“All participants emphasized the need to remain vigilant in the risk of further inflation and long-term waiting for inflation,” the note showed.

Now, officials are trying to keep the economy afloat because it is growing faster and the job market is thriving. Employers added 431,000 jobs in March, wages rising sharply, and unemployment almost equal to 50 years before the epidemic.

Central banks hope that a stable labor market will help them reduce their assets without falling short. This will be difficult, given the tools of Fed policy, which the authorities have approved.

At the same time, Fed officials are concerned that if they do not respond strongly to inflation, consumers and businesses can expect higher prices. This can accelerate the rise in prices and make fighting them more difficult.

“It’s very important to reduce inflation,” Lael Brainard, the Fed’s new diplomat, has been appointed as the second-in-command for the central bank, he said on Tuesday. As a result, the committee will continue to strengthen its monetary policy system through increased interest rates and begin reducing funding expeditiously at our May meeting. “

Ms. Brainard says the decline in stocks could happen “quickly” in the stock market, sending stocks down and bond prices rising. Advertisers also put their interest in the minutes released Wednesday.

The March meeting notes provided details on what the sheets would look like. Fed officials agree to a plan to reduce the repayment of securities, minutes showing, which is expected to decrease monthly by $ 60 billion in Treasury security and $ 35 billion in debt repayment.

This could be twice the rate set by the Fed when it reduced its spending between 2017 and 2019, confirming policymakers have been offering in recent weeks that the plan could be implemented more quickly this time around.

Officials “agreed that the currency could be exchanged for three months or longer if the market needed it,” the minutes show, while the sale of debt repayment can be reconsidered “after a positive pay rise. It is in full swing.”

Apart from confirming the rapid movement of the download and reaffirming the Ms. signal. Brainard said that the decline of the page could begin soon, with minutes showing that “many” who participated in the meetings “would have preferred a 50-point increase in federal financial goals. The cost of this conference.”

Although they stood for a significant increase in the face of the uncertainty surrounding the Russian invasion of Ukraine, officials suggested that a rise above one-third would be justified if inflation were to rise.

And officials have shown signs that rapid inflation is coming to an end.

“Most of the participants indicated that business affiliates continued to show significant increases in pay and product prices that were offered at higher prices to their customers without significant reductions,” the minutes showed.

The factors that Fed officials thought could lead to further inflation included “increased demand, a sharp increase in the price of electricity and commodities, and the disruption of commodities that had to take a long time to resolve,” the minutes said.

Overall, the discussion at the moment shows growing fear of speed and persistent price hikes.

“The increase in the number of minutes shows a strong concern among decision makers” on the rise in inflation and a lack of concern for growth, economists Morgan Stanley wrote of the recent incident.

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