Raphael Bostic, chairman of the Federal Bank of Atlanta, said on Monday (11th) that since the outbreak of the epidemic, the US economy has recovered faster than expected, and the rate of interest rate increase may also be faster than expected, perhaps as soon as the second half of 2022. Earlier than most Fed members thought, wait until at least 2023.
But Bostic said that he believes that the emergency measures taken by the Federal Reserve to fight the epidemic may be gradually tightened in the next two years, even if they are not taken back early.
Bostic said in an online conference: “I think the economy may be better than some people expected. If this happens, I am prepared to support the withdrawal and slight adjustment of these monetary stimuli, and then consider raising interest rates.”
Bostic added: “But these changes will not happen this year, and there are still many tasks to be completed. I think there may be more changes in the second half of 2022 or even 2023.”
At the Fed’s December monetary decision-making meeting, the Fed stated that until 2023, the average Fed members expect the benchmark interest rate to remain between 0% and 0.25%.
In addition, the dot plot shows that all 17 Federal Open Market Committee (FOMC) members believe that interest rates will not be raised this year, and only one member believes that interest rates will rise in 2022; three members believe that interest rates may rise by 25 basis points in 2023 , One person believes that interest rates should be raised by 50 basis points, and another official believes that interest rates should be raised by 100 basis points, or 1 percentage point.
On the whole, Fed officials are still cautious about the various risks faced by these forecasts. Bostic stated that the future economic growth rate depends almost entirely on the speed of American vaccination and the control of the epidemic.
Bostic further stated that permanent unemployment, the financial status of small businesses and consumer confidence are his three major indicators for judging when the Federal Reserve will begin to tighten monetary easing.
In addition to the zero interest rate level, in order to combat the impact of the epidemic, the Fed expanded its balance sheet by more than 3 trillion last year.USD, And implemented a series of loans and stimulating liquidity programs. Among them, the credit facilities of primary and secondary market companies, municipal liquidity financing of state and local governments, and direct loans to small and medium-sized enterprises were terminated at the end of last year.
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