The sound becomes sharper Fed sees two rate hikes in 2023

Status: 16.06.2021 8:59 p.m.

As expected, the US Federal Reserve left its key interest rate unchanged. However, the loose monetary policy will not go on forever. The stock markets are falling, and the euro is also falling. Despite the waning corona pandemic and rising inflation rates, the US Federal Reserve continues to keep its key interest rate in a range between 0.00 and 0.25 percent. The monthly bond purchases of $ 120 billion are also expected to continue for the time being. At least until progress is made towards achieving the bank’s goals. In particular, this means “considerable progress in terms of price stability and employment”. This was stated by the monetary authorities after their two-day routine interest rate meeting in Washington. According to Fed Chairman Jerome Powell, the Fed is still a long way from achieving its goal: “But we are making good progress.” The bank continues to blame temporary factors for the recently stronger rise in inflation data. At the same time, she expects inflation to rise to 3.4 percent this year and drop to 2.2 percent in 2022. There is also increased economic activity and employment. Powell said the discussion about scaling back the extremely loose monetary policy had begun. The point is when it will reduce its regular bond purchases. However, Powell was not specific. Basically, the Fed chief said that if you will, you have talked about wanting to talk about the subject. With such cautious wording Powell should try to avoid panic-like reactions in the financial markets.

Two rate hikes envisaged in 2023

For the first time since the outbreak of the pandemic, however, the monetary authorities signaled that there could be two interest rate hikes of half a percentage point each in 2023. So far, the Fed’s interest rate projection provided for an unchanged monetary policy with a key interest rate close to zero. After all, seven monetary authorities are now even of the opinion that a tightening could come next year. Not only has the interest rate forecast been raised, expectations for economic growth and inflation are also higher in some cases. For this year, the Fed is expecting macroeconomic growth of 7.0 percent instead of the 6.5 percent previously expected.

Share prices are falling

Wall Street reacts with price losses, all leading stock indices give way in an initial reaction. The leading index Dow Jones lost around one percent, the other indices are slightly below. Prices are also falling on the bond market, with the yield on ten-year US government bonds increasing to 1.56 percent. The euro is losing significantly against the dollar and is currently trading at 1.2026 dollars, around one cent less than in today’s trading

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Yang Tian, ​​the senior director of Sohu Group’s Intelligent Media R&D Center, recommended “Tong Jian”. These characters and stories have passed through thousands of years and can still be references for our modern life and are worth reading repeatedly.

Q: Bring a book to the future, what book will you bring?

A: On World Book Day, let me take a book to the future. I would recommend “Tong Jian”. This book condenses the history of China for one thousand years. When we face the faster and faster pace of the world, With more and more uncertainties, we might as well take a look at the real historical events and characters, and find a reference for the development of things. Reading history also allows us to better understand the world we live in.

Q: How do you think about fragmented reading?

A: The way I read “Zi Zhi Tong Jian” is to open it at will, and then read from its story. So now our time is getting more and more fragmented, but the book “Zi Zhi Tong Jian” happens to be a book that you can continue reading from anywhere, even though our lives and our time are fragmented. But the joy that knowledge and concentration bring to people remains unchanged. It is said that one inch of time and one inch of gold, even if we only read 15 minutes each time, perseverance will be different.

About the interviewee:

Yang Tian

Yang Tian: Senior Director of Sohu Group Intelligent Media R&D Center. Graduated from Tsinghua University with a bachelor’s degree and obtained a doctorate degree from the Chinese Academy of Sciences. He is currently responsible for the overall product technology of Sohu.com, Sohu.com and Sohu Video.