Online Forex Trading Broker News:Fed policymakers agree that interest rates may remain the same ＂for some time＂!
2020-01-06 13:07 from：CAPSTONE author：Jack
Online Forex Trading Broker News:US Federal Reserve (FED / Fed) policy makers agreed at the last policy meeting in 2019 that interest rates may remain "for some time" because the Fed is looking at developing a new monetary policy framework.
The minutes of the Fed ’s December 10-11 policy meeting released on Friday also show that policymakers are preparing to discuss ways to change the way they manage financial market liquidity, including the possibility of establishing a permanent repo mechanism.
The minutes of the Federal Reserve meeting usually reflect the pros and cons of the two camps when discussing whether to adjust their monetary policy stance. However, the minutes of the last meeting released today are abnormal, reflecting that the Fed reached a high consensus at the end of 2019 that the Fed has cut interest rates several times during the year and has made sufficient efforts to prevent the economy from slipping into recession.
Minutes of the meeting show that "the participating members believe that it is appropriate to keep the target range of the federal funds rate unchanged."
Similarly, the minutes noted that policymakers believe that as long as the economy stays on track, the current interest rate position "is likely to remain appropriate for some time."
At the same time, Fed policymakers are engaged in a protracted discussion on how best to manage monetary policy.
Policy makers agree that they will not follow recent practice and "reiterate" the Federal Reserve's long-term goal statement in January. "The committee plans to revisit the statement when the policy evaluation is nearing its conclusion, possibly around mid-2020."
The minutes also show that policymakers have made suggestions on topics discussed at some future meetings, including "the possible role of standing repurchase tools", "setting the management interest rate" and the long-term composition of the US debt held by the Federal Reserve.
In September last year, the supply of funds in the bank's financing market unexpectedly rushed, causing the bank's overnight lending rate to soar, reaching as high as 10%, which was more than four times the Federal Reserve's loan interest rate at the time. Since then, the Fed has initiated daily liquidity operations to prevent financial system failures.
Since then, the Fed has provided banks with about $ 50 billion of overnight and short-term loans through repurchase agreement operations every day. In October last year, the Federal Reserve launched a plan to purchase 60 billion U.S. dollars of short-term U.S. Treasury bonds each month, expanding its balance sheet for a long time, and increasing bank reserves.
The end of the year is a period of special concern for the Federal Reserve and Wall Street, during which the bank's capital needs will usually be high to ensure sufficient reserves at the end of the year. At the end of 2019, the Federal Reserve injected about 250 billion dollars into the market to prevent interest rates from soaring again as in September. From the current situation, this move successfully prevented the worrying rise in borrowing costs.
However, after avoiding the money shortage at the end of the year, Fed officials must decide as soon as possible how long the daily repo operation will last and whether a permanent repo mechanism should be established. They must also decide how long this round of bond purchases will last, and their current commitment is to last until the first quarter of this year.
Federal Open Market Committee (FOMC) members' past comments on this issue suggest that it may be difficult to reach broad consensus on how to advance these two issues.
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