FOMC Comment: Inflation Leaves Expectations
A somewhat anticipated job diagnosis and Fed freeze
At the January FOMC meeting, the Fed maintained its benchmark interest rate at 1.25-1.50%, as expected.
The Fed 's economy is still solid.
Consumption is stable and fixed investment is expected to be good.
However, as in December, it is still below the 2% target price level, which is the reason for the freeze. Earlier inflation, which controlled the normalization of monetary policy in the ECB and BOJ, has been applied to the FRB as well.
However, the nuance of the price has changed slightly
In general, although the monetary policy stance was maintained in December, slight changes are also being detected.
This is an impression that the perception of prices has changed somewhat.
Still, the current price level is low and I have expressed a cautious stance that I should keep watch on the future, but I feel like I am turning a little on the assumption that the price will rise in comparison with the previous meeting.
In December, for example, inflation fell, but in January it was excluded and expected inflation is rising.
In particular, the 12-month inflation rate is expected to rise this year and stabilize at the target level of 2%, which is expected to boost inflation even further.
Yellan ends financially in favor of March rate hike
Looking back, the interest rate hike that took place in December was not immediately visible.
From the perspective of the central bank, the medium-term economic environment is merely the cause of monetary policy changes.
As the fiscal policy is on the rise in the US economic indicators, which have been difficult to disagree with, the Fed is willing to ease the rate hike more easily if it releases the shackles of low prices.
If so, the nuance of the price, which could be meaningful but fine, would contain the burden of the March rate hike and the willingness of Yelan to leave the Fed
look like.
Therefore, the Federal Reserve's interest rate hike is likely to be strong at the March FOMC meeting.