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Monday, January 24, 2022

Fed Announces Monetary Policy Update for December

A new policy note points to a more aggressive rate hike program, but the news did not affect the stock market.

News analysis

The Federal Reserve said it will pursue a more aggressive inflation-fighting policy in a new FOMC statement released Wednesday.

The statement said the Fed intends to implement three rent increases in calendar year 2022, as well as cut its $ 30 billion a month asset purchase program, doubling the rate of cut, to complete the program by March next year. year.

The announcement represents a notable shift in the mood of Fed officials earlier this year. As recently as last summer, bankers were not enthusiastic about a rate hike in 2022, and many experts believed the rate hike could wait another year until 2023. The new announcement comes amid a wave of inflation that has caught many economists, including those from the Federal Reserve, surprised by their size and speed. Monetary policymakers are under increasing pressure to tackle this problem, and more experts are calling for faster and more radical rate hikes to keep inflation from spiraling out of control.

As the Fed tackles the current economic problems rooted in the CCP virus pandemic, it faces a delicate situation. On the one hand, Wall Street continues to advocate a light hand on rate hikes, and decisive action to reduce inflation could trigger a downturn in the stock market. However, consumers and small businesses are faced with an atmosphere of scarcity as they find that wages are not keeping pace with rising prices, exacerbated by constant stress in the supply chain. Thus, the Fed faces an unenviable and difficult quandary as it must cushion inflation without rocking the boat so hard as to crash the stock market.

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Immediately after the Fed’s announcement, the stock market rose significantly and investors were reassured that the measures were less severe than many analysts initially predicted. Earlier, Federal Reserve Chairman Jerome Powell indicated a more aggressive stance in recent statements, and the announcement served to convince the markets of the Fed’s more delicate approach.

However, it remains unclear whether the proposed measures will be sufficient to offset the huge inflationary pressures that markets and prices face in the coming year.

To follow

World Nation News Deskhttps://www.worldnationnews.com
World Nation News is a digital news portal website. Which provides important and latest breaking news updates to our audience in an effective and efficient ways, like world’s top stories, entertainment, sports, technology and much more news.
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