Although it was already known that the EDF It would reduce the buyback levels, this change would mean that the program would officially come to an end in early 2022. It is believed that an increase in interest rates could come later, this due to the increase in inflationary levels.
The US Federal Reserve (FED), the main body responsible for the country’s monetary and financial reforms, indicated today that it would double the rate at which it has been reducing the purchase of government bonds. treasure and mortgage-backed securities, with which he plans to leave this figure at about USD $ 30,000 million per month, with the intention of officially finalizing this measure early next year.
EDF will reduce bond buybacks
This was confirmed by the agency in a meeting held today, where it indicated that these measures seek to favor the nation’s economic indicators, proposing a much more accelerated pace of implementation than that originally contemplated in previous meetings and speeches, since the program The bond buyback was originally scheduled to end in mid-2022.
In this regard, during a press conference held after the meeting of the EDF, state agency director Jerome Powell commented:
“Economic developments and changes in prospects justify this evolution in monetary policy. The economy has advanced rapidly and employment indicators have reached their maximums ”.
We bear in mind that this measure would imply an important change with respect to the conditions announced in September of this year, where Powell indicated that the FED would continue its program although it would gradually reduce reinvestment in bonds and securities, this to the extent that the that the economic indicators were progressively improving.
Possible increase in interest rates?
However, given the fact that the body kept bank interest rates close to zero, analysts and enthusiasts contemplate the possibility that this could change before 2023, especially in light of the increase in inflationary levels that fall on the local currency.
Faced with this possibility, Powell has repeatedly commented that interest rates would remain close to zero at least until 2023, although changes in the rate of repurchase of bonds and securities were something that was anticipated, but inflationary levels and the repercussions on the local economy could generate imbalances that should be appropriately addressed before they have a greater impact.
Faced with the possibility of an increase in interest rates, the chief economist of Grant Thornton LLP, Diane Swonk, commented:
“With inflation that has exceeded 2% for some time now, the committee hopes that it is appropriate to maintain this target range until labor market conditions have reached levels consistent with the employment commission’s assessments.”
More aggressive measures against inflation
Following Powell’s reelection as president of the EDF, The different political sectors in the United States have been pressuring the director of the Federal Reserve so that it takes more aggressive measures against the inflationary phenomenon that is currently registered.
Analysts and enthusiasts suggest that there could be a change of perspective on Powell’s part, precisely because he does not feel that his measures could compromise his stability in office. This was indicated by the CEO of Galaxy Capital, Mike Novogratz, who at the time assured that this could be counterproductive for both traditional markets and the crypto sector:
“We have inflation that is increasing … in a pretty bad way in the US So, we can see, the Fed will have to move a little bit faster … That should slow all assets. It would slow down NASDAQ. It would slow down the growth rate of cryptocurrencies if we had to start raising rates much faster than we think. “
Version by Angel Di Matteo / Daily bitcoin
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