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发帖数: 11530 | 1 Federal Reserve bullish on U.S. economic growth
By VICTORIA GUIDA 09/20/2017 02:32 PM EDT
In a vote of confidence in the U.S. economy, the Federal Reserve said
Wednesday it will start next month to pull back some of the massive support
it has provided since the financial crisis, allowing some of its more than $
4 trillion in assets to mature without being replaced.
Central bank policymakers also held firm to their message that they will
hike interest rates once more this year — despite lowered expectations for
core inflation — and three more times in 2018.
Indeed, the Fed is more optimistic about economic growth this year than it
was in June, predicting GDP will grow by 2.4 percent, compared to its
previous projection of 2.2 percent.
The Federal Open Market Committee voted to keep rates between 1 and 1.25
percent for now.
The Fed's top policymaking body acknowledged the damaging effects of recent
hurricanes, noting that higher prices for gasoline and other items could
temporarily boost inflation, but said it did not expect longer-lasting
economic effects from the storms.
“Hurricanes Harvey, Irma, and Maria have devastated many communities,
inflicting severe hardship,” the FOMC said in its statement after two days
of meetings this week. “Storm-related disruptions and rebuilding will
affect economic activity in the near term, but past experience suggests that
the storms are unlikely to materially alter the course of the national
economy over the medium term.”
Fed officials also slightly adjusted down their expectations for how much
the central bank should raise its main borrowing rate over time, projecting
2.8 percent as the proper rate for the long term, compared to its 3 percent
projection in June.
The FOMC voted unanimously to begin shrinking its huge holdings of Treasury
bonds and bundled mortgages at a slow pace, consistent with the plan it has
been telegraphing for months, so as not to spook investors.
Under that plan, the Fed's balance sheet will shrink by $10 billion for the
first three months, an amount that will increase by $10 billion every
quarter until it reaches a ceiling of $50 billion.
“Once caps reach their maximum amounts, they will remain in effect until
the Committee judges that the Federal Reserve is holding no more securities
than necessary to implement monetary policy efficiently and effectively,”
the FOMC said in a supplementary statement.
It has been nearly a decade since the Fed first began its extraordinary
support for the U.S. economy. As the country sank into a recession, the
central bank slammed on the accelerator in late 2008 to try to encourage
economic activity. It slashed interest rates to zero and bought up assets to
prop up the housing market and convince banks they should lend, since
interest rates would stay low. It later conducted two more rounds of asset
purchases.
Because the size of its purchases was unprecedented, the Fed is facing
uncharted territory in shrinking its balance sheet. How the economy responds
to the central bank’s move is key as President Donald Trump aims for
sustained 3 percent annual GDP growth and considers whether to reappoint Fed
Chair Janet Yellen. |
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