NEW YORK (Reuters) – The Federal Reserve on Wednesday advanced its projections for the first post-pandemic interest rate hikes to 2023, citing better health and dropping a long-standing reference that the crisis was hitting the nation. the economy.
The new projections saw a majority of 11 Fed officials in at least two quarter-point interest rate hikes by 2023, even as officials in a statement after their two-day policy meeting pledged to maintain support policy for now to encourage continued job recovery.
The Fed also made technical adjustments to prevent its benchmark interest rates from falling too low. It increased the interest rate it pays to banks on reserves, the IOER, held at the US central bank by five basis points, and also raised the rate it pays on reverse repurchase agreements to 0.05% from zero. to one day, which is used to establish a short floor. – Term interest rates.
SHARES: Losses extended to -0.83 %%
BONDS: He jumped to 1.5464% and the 2-year yield rose to 0.1911%
FOREX: The highest return. It was the last time up to 0.57%
FRANCES DONALD, GLOBAL CHIEF ECONOMIST, MANULIFE INVESTMENT MANAGEMENT, TORONTO “The dot plot now shows two rate hikes for 2023. That’s quite an aggressive surprise for the bond market and it’s getting all the attention.”
“The interesting thing here is that the Federal Reserve has increased its estimate of when the first rate hikes will come, but has not materially changed its growth and inflation projections for 2022 and 2023. What that tells us is that, while the outlook has not changed drastically, It seems that the confidence of the Fed in returning to a normal environment has ”.
“There has not been a material change in tone. This statement has only a few adjustments.
“The market is reacting to some strands of information on the dot plot. Now is the time for Powell to try to dissuade the market from reading too much on the dot plot.”
TOM MARTIN, SENIOR PORTFOLIO MANAGER, GLOBALT INVESTMENTS, ATLANTA
“The market wants the Fed to communicate that it is going to provide the accommodation that the country will need while it is on the lookout for inflation, and for me, what they got from this announcement is what the market wanted.
“On average, the market wants the Fed to be measured, which it absolutely did with this release.
“I don’t see the moves on the S&P and the Nasdaq mean much.”
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