“Bitcoin does not jeopardize the USD”— Paul Ebeling
The Fed: Inflation has risen reflecting transitory factors and will continue to increase its holdings of Treasuries by at least $80-B/month and agency mortgage-backed securities by $40-B/month until more progress is made toward maximum employment and price stability goals. The median projection among FOMC members is for real GDP to grow by 7.0% in Y 2021. The policymakers played down concerns that their efforts to develop digital currencies will take business away from the financial industry. Further that Bitcoin does not jeopardize the USD.
As expected the Fed did not announce any major changes when it concluded its 2-day policy meeting Wednesday afternoon, it offers reassurance that it is keeping an eye on rising prices.
The policy maker have made clear they will not alter monetary policy until they see lasting signs employment and inflation have recovered from the unprecedented economic damage from the VirusCasedemic chaos.
The Fed cut the benchmark lending rate to Zero in March 2020, and has been buying $120-B of bonds a month to provide liquidity to gin the economy.
Rising prices have some investors and pundits concerns that the Fed policymakers will have to pull back on that stimulus sooner than expected, which could put the brakes on the strong economic rebound, but not likely.
Fed Chairman Powell has and continues to broadcast the message the price spikes are largely temporary, and in his press conference Wednesday at 2.30p EDT, he likely will repeat his stance while stressing the Fed is vigilant and will act if needed to contain inflation.
Members of the Fed’s policy-setting Federal Open Market Committee will offer updated economic projections, which will reflect rising inflation and stronger growth, and may bring forward the date of the 1st expected increase in the Key interest rate, possibly as soon as Y 2023. However, I do not expect that to happen until the Jackson Hole meeting in August.
Have a happy day, Keep the Faith!