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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
WSJ nonetheless claims this inflation rate makes fed uncomfortable even though they think this reflects temporary factors that should fade later this year.<\/p>\n
Fed has previously said they will give markets plenty of advanced notice before tightening, with it trying to avoid a ‘temper tantrum.’<\/p>\n
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.<\/p>\n