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Do you think higher inflation will come? The Fed sees it and believes it

The Federal Reserve Board will meet this week, just as the outlook for fiscal stimulus will be greatly boosted after the Democratic Party of Japan dominates the Senate.

Some on Wall Street are talking about higher growth and higher inflation. Color the skeptical Fed.

Economists do not expect Fed Chair Jerome Powell to change the dovish message at all.

“FRB officials are reluctant to improve their outlook, and most people” believe when they see it, “said Aneta Markovska, chief economist at Jeffreys, in a note to customers. I’m taking it. “

Powell will meet with reporters on Wednesday at 2:30 pm Eastern Standard Time after the Fed issues a policy statement at 2:00.

Powell’s remarks are expected to be a highlight for investors, as the statement is expected to remain unchanged. The Federal Reserve Board will not release the latest economic forecasts until its meeting on March 16-17.

In a comment echoed by many Federal Reserve Board watchers, Jim O’Sullivan, a US macro strategist at TD Securities, agrees that there is reason to believe growth is fair, even if he agrees. Powell said at a news conference that he expected to be quite dovish about monetary policy. Strong later this year.

“I hope Powell emphasizes that inflation is key when the Fed’s exit begins. Most Fed officials say some strong quarterly growth is suddenly inflated,” O’Sullivan said. I’m skeptical that it will lead to a meaningful recovery. “

Rising inflation will be a win for the Fed. Central banks around the world are working on disinflation, which is pushing down interest rates and growth prospects.

The Federal Reserve Board of Governors buys $ 120 billion a month in Treasury securities and mortgage-backed securities to maintain financial position and boost the economy.

At a previous meeting, the Fed said it would keep buying until the Fed’s goals of low unemployment and stable 2% inflation were “significantly advanced.”

Over the past six weeks, some Fed officials have speculated that a tapering of purchases could occur this year.

In response to, Powell told Princeton University web conference It was premature to talk about the exit. He also argued that inflation could rise temporarily, but is unlikely to persist.

Lou Crandall, chief economist at Lightson ICAP, said the Fed’s chair wanted to make it clear to the market that the Fed did not intend to tighten prematurely.

“The best way to persuade the market not to trigger the FOMC is to be content with raising interest rates in the future, to be noticeably patient with the start of quantitative easing policies,” Crandall said. Stated.

The Federal Reserve Board recognizes that there are potential financial stability risks in this monetary policy environment.

Cleveland Fed President Loretta Mester “I didn’t think the underlying risks of the current financial system were excessive in any way,” he told reporters earlier this month. She added that she would continue to monitor the sector.

10-Year Government Bond Yield

It has risen 0.127 percentage points since the Fed’s last meeting in mid-December.

Do you think higher inflation will come? The Fed sees it and believes it Do you think higher inflation will come? The Fed sees it and believes it

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