Federal Reserve: May raise interest rates in March plan to significantly shrink the balance sheet

2022-04-23 0 By

Beijing Business Daily on January 26, local time, the US Federal Reserve (FEDERAL Reserve) released the signal of raising interest rates at the first meeting of 2022, and reiterated that it will end the bond purchase program at that time, and then start the large-scale shrinking of the balance sheet.Fed Chairman Jerome Powell said at a press conference after the meeting that the Central bank would keep an open mind in adjusting monetary policy to prevent persistent high inflation from becoming entrenched.”We have not made any decisions on the path of policy at this point,” he said. “I stress again that we will remain humble and flexible.”At the same time, he said economic conditions were different and policymakers had “considerable scope to raise interest rates without threatening the Labour market”.FOMC members also agreed on a set of principles to shrink the massive balance sheet “substantially” by reinvesting the amount of principal collected from maturing bonds each month.The Fed said the program would begin after it raises interest rates, but it has not set a specific date, pace or final size.