Fed is likely to say after its two day policy meeting which concludes today that it will maintain short term interest rates near zero and it will keep buying $120 billion in government bonds and corporate bonds.
However WSJ reports fed is likely to signal a raise in interest rates sooner than previously stated with their last suggestion being they expected interest rates to remain at current levels until 2023.
That follows a rise of 5% in inflation during May, which some see it as misleading because it compares to last May 2020 when the economy was completely shut down and the velocity of money plunged.
WSJ nonetheless claims this inflation rate makes fed uncomfortable even though they think this reflects temporary factors that should fade later this year.
Fed has previously said they will give markets plenty of advanced notice before tightening, with it trying to avoid a ‘temper tantrum.’
So little is expected to change where interest rates and bond buying is concerned, but the forward guidance may be a bit different with fed expected to provide a new timeline regarding when they estimate to start monetary tightening.
Source: Read Full Article