Comments: The Ministry of Feds Conference disclosed to the reduction of the sign

Source: Bloomberg

Author: Craig Torres

The Minutes of the March meeting of the Federal Reserve show that decision makers generally agree to reduce the scale of the monthly scale by about half.

According to the minutes, at the meeting of March 19-20, "almost all" participants believed that this year "some time" began to reduce borrowing costs.However, several inflation data announced since then have subverted the market's expectations of three interest rate cuts this year.

Fed officials mentioned that inflation is constantly slowing, but this road usually may generally be a bit bumpy.

Decision makers began a discussion on the pace of slowing down the table, but did not make decisions at the March meeting.

Although most officials believe that the shrinkage is progressing smoothly, after a "wide evaluation", they believe that in view of the market turmoil caused by the shrinking table in 2019, they should be cautious on this issue.

The minutes of the meeting showed that "most participants judged that starting to slow down the table as soon as possible will be a secure approach."

The Fed has been reducing US Treasury bonds and mortgage to support securities at a rate of $ 95 billion per month.The Federal Reserve President Powell said at a press conference on March 20 that the Fed is considering slowing down the pace of shrinking soon to "help ensure stable transitions and reduce the possibility of pressure on the currency market."

The minutes of the meeting show that officials generally tend to maintain the upper limit of the current reduction of mortgage support securities (MBS), but adjust the pace of US Treasury bonds.

Wall Street is paying attention to what level of banking reserve should be maintained to ensure both liquidity and avoid impacting the financial market.At present, financial institutions have nearly US $ 3.5 trillion in cash in the Federal Reserve.

Continuous inflation

The minutes of the meeting also highlighted that officials were unwilling to reduce interest rates, unless there were more evidence proved that the inflation rate had steadily moved to 2%.

The March Consumer Price Index (CPI) announced earlier on Wednesday shows that the increase in inflation in the first two months of this year is not the so -called "small bump".The core CPI increased by 0.4%month -on -month, an increase of 3.8%year -on -year.

Although the Federal Reserve officials who predicted the interest rate cuts this year in March accounted for a weak majority, the latest inflation data weakened the earliest reason to cut interest rates in June, indicating that the number of interest rate cuts this year may be less than three times.

Powell delivered a speech at a event at Stanford University on April 3 that, in view of the strong momentum of the economy and the progress of anti -inflation so far, officials have time to allow data to guide monetary policy.