This Wednesday the Federal Reserve of the United States will communicate at 3pm (GMT -3) the decision on interest rates, after a two-day meeting. After that, J. Powell will speak about the monetary policy that they will carry out.
The entity is expected to maintain interest rates around 0.00% and the focus will turn to Powell’s statements. Last week it was announced that the nation’s economy is at a turning point, between the ravages caused by the pandemic and a period of recovery.
Although these advances are attributed to a seasonal factor, as a result of the vaccination process, the reopening and expansion of circulation, they are also due to the fact that the effects of the monetary injections are being seen in the Trump and Biden administrations.
The question is whether they will maintain the expansionary monetary policy and if they will give specific deadlines on reducing it. The current policy has been implemented since the beginning of the pandemic in order to increase money in circulation and not compromise consumption.
In this sense, they have implemented the decision to purchase bonds by injecting liquidity into the economy.
Powell’s statement will be important because it is expected to know when changes to these measures are implemented. The current interest rate policy is governed mainly by the advance in inflationary rates and by employment levels.
As for the first factor, it would imply changes in policy from an increase in the stable CPI towards 2%. Given that in recent months there has been a slight increase in the same and estimates have been made about reaching the goal in advance of the projections, it is believed that they will incur a turn in the measures sooner.
In line with the second factor, unemployment levels and claims for unemployment benefits have improved the statistics in recent weeks.