Stimulus measures of The Fed:
Stimulus measures of The Fed:
[caption id="attachment_6570" align="alignleft" width="300"]
Jerome Hayden Powell[/caption]The Fed, US central bank, released money through unlimited quantitative easing, To escape the shock from the coronavirus, and the US Treasury did its best to boost the shaky real economy through strong stimulus measures.
The amount released through quantitative easing reached 4 trillion dollars. was released as a fiscal policy.
With so much money loosed, QE has pushed interest rates to the bottom, and zero interest rates seemed to last forever.
No, it seemed like it would continue until the end of Corona.
And strong fiscal stimulus is good, but the question of where does that money come from... leaves me speechless.
Reports have surfaced that the US national debt exceeds $30 trillion.
The only thing that had to be done was to release $5 trillion in just over a year, so the mountain of debt would have been piling up high.
If this amount of money was released in the early days when the number of corona patients was small, but the number of confirmed cases is still renewing the all-time high every day, shouldn't we have to release more money?
In fact, we laughed at Omicron, but even at the White House in the US, we could see that quite a few Americans complained of pain in December last year because of Omicron.
Of course, the real economy in the US still seems to be strong because the power of stimulus is still there, but it still hasn't recovered from the scars of the corona, doesn't it need more stimulus?
More stimulus cannot be mentioned now.
The austerity and tapering:
Now, the discussion about austerity rather than stimulus is very lively and fast.
It was in the second half of last year that we talked about when to taper.
Chairman Powell did not discuss tapering within the year until September of last year, and he said that he would finish the tapering only in June 2022.
The historical precedent for rate hikes after a period of time after the tapering was over has strengthened the argument that a rate hike will only happen in the first half of 2023.
That was in September of last year, and in just over 4 months, the mood has completely changed.
The rate of inflation in the United States is increasing day by day like an unbridled foal.
In response, the Fed is pushing the tapering to March and is also accelerating rate hikes significantly.
Chairman Powell tapering announcement[/caption]The pace of austerity is quite different from that of 2013-2018.
Let me tell you a little bit about 2013, back then, in May of 2013, we declared tapering.
It wasn't until January 2014 that I started tapering.
And it ends in November 2014. The first rate hike since then was only possible in December 2015.
And the second impression was surprisingly made in December 2016, more than a year later.
Since then, interest rates have been raised three times in 2017 and four times in 2018, resulting in a total of nine rate hikes.
Raising interest rates would hurt the growth?
Interest rates were raised over a period of about four and a half years from May 2013 to the end of 2018.
But, it seems to be a different story now.
The tapering is scheduled to end in March of this year, and at the same time as the tapering ends, an interest rate hike in March is likely.
And if you look at the foreign media, the base rate hike is expected about five times within the year.
There is also a minority opinion that it could be more than that.
If you look at the previous case, compared to the 9 increase in 4 and a half years,
It feels quite burdensome to raise five times in just one year.
It looks much stronger in terms of speed and strength than in the past.
So what would you think?
I still haven't been able to get out of the corona virus, but if I raise interest rates like this strong and fast, wouldn't it hurt the growth...?
Raising interest rates to keep up with inflation:
It's a bit of a terrifying metaphor, but I think it's a bit like cancer treatment.
Cancer cells called inflation are spreading in a fragile body.
To get rid of these cancer cells, you need chemotherapy, and I heard that the pain is considerable.
The fact that the pain is significant means that it has a negative effect on the body as well.
Interest rates and inflation by Federal Reserve board[/caption]Raising interest rates to keep up with inflation, if not too much, could put a significant strain on the economy still groaning from the coronavirus and on the real economy, which is relying on the effects of stimulus measures.
If inflation thought like a human, you would think like this.
"Fed, you won't be able to raise interest rates in time, because you'll never want the real economy hurt..."
Then, if you don't raise interest rates with growth in mind, inflation will get stronger because it's not even checked by the Fed.
By the way, contrary to this idea of inflation (?), the Fed is moving faster.
Doesn't it make you feel better just looking at the talk of raising interest rates five times a year?
Of course, market participants, and American journalists, are equally concerned about these concerns.
Chairman Powell and interest rates:
So I asked Chairman Powell. How much do you expect interest rates to rise this year? Chairman Powell responds:
He did not immediately answer the question of the possibility of raising rates at each FOMC meeting this year, but instead said that he needed to be "humble and nimble" and "will respond according to future data and outlook changes."
He is humble and agile. It sounds like an alumni, but I think it is the best expression of the Fed's stance in the future.
First, the Fed is trying to be humble. Being humble doesn't mean being polite in front of the market, it's just that you're going to give up the idea of making bold predictions about the market.
The idea of raising and lowering interest rates in advance according to this expectation because inflation will go down or rise higher... I'm not going to do that.
Last year, I said that there is no need to respond by raising interest rates because it is a temporary rise in inflation, but I was just saying that I would be humble enough to have been properly humiliated. So what does being agile mean?
'humble & nimble':
I will not be hasty in predicting the distant future, but if it becomes clear to what extent inflation will rise or will stop now, I will quickly catch up with austerity or easing policies without hesitation.
Yes, the Fed's stance is to be really nimble when it comes to price-related data.
So, we are talking about responding to changes in future data and forecasts.
So, how many times will the Fed raise interest rates this year?
You can predict the number of rate hikes by predicting how inflation will change this year.
But the Fed has decided to be humble. It can change a lot depending on the price. Changes in the US Consumer Price Index, released monthly, will increase the change.
And if you check that data, you'll quickly move towards austerity or easing.
In the second half of last year, it was mentioned that the tapering would be carried out within the year, and the move to five interest rate hikes in just four months is a representative case of agility.
Let's see what the Fed's humility creates from moment to moment, and the pace at which its agility will match. It seems to be this year's observation point.
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