US FED decision: The US Federal Reserve did not change interest rates, making this major decision regarding bond purchases

Business Desk, Amar Ujala, New Delhi

Published by: Deepak Chaturvedi
Thursday, 16 December 2021 03:35 PM Updated to IST

Summary

US FED decision on interest rates: The Bank of America, the most powerful country in the world, has not announced that it will raise interest rates. The US Fed has kept interest rates at 0.00-0.25 percent. In addition, the bank has taken a big decision to drastically reduce bond purchases.

US Federal Reserve
– Photo: Social Media

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The Federal Reserve, the US bank known as the most powerful country in the world, has not yet announced an interest rate hike. The US Fed has decided to drastically cut bond purchases, keeping interest rates at 0.00-0.25 percent.

Bond purchases are suspended until March 2022
According to the US Fed, interest rates will remain the same for now, but will triple next year. In addition, the bank has decided to tap into $ 30 billion worth of bonds each month. The bond purchase will be discontinued by March 2022. The U.S. Fed has revealed that it is likely to triple in 2022. It is likely to double in 2023 and double in 2024. The bank said the policy review for the recovery of the economy was ongoing.

Estimated increased inflation
The bank has raised its inflation forecast for 2021 from 4.2 per cent to 5.3 per cent. Inflation is projected at 2.6 percent in 2022. Apart from this, the unemployment rate estimate for 2021 has been reduced from 4.8 per cent to 4.3 per cent. At the same time, the 2021 GDP estimate has been reduced from 5.9 per cent to 5.5 per cent. However, it has raised its GDP growth forecast for 2022 from 3.8 per cent to 4 per cent.

U.S. markets rallied after this decision
The US market rallied after the Fed’s policy announcement. The Dow Jones was up over 350 points. At the same time, the S&P 500 gained 1.6 percent. Nasdaq ended with a gain of 2.15%. Meanwhile, the dollar depreciated but bond yields rose. Brent and gold prices rose.

Range

The Federal Reserve, the US bank known as the most powerful country in the world, has not yet announced an interest rate hike. The US Fed has decided to drastically cut bond purchases, keeping interest rates at 0.00-0.25 percent.

Bond purchases are suspended until March 2022

According to the US Fed, interest rates will remain the same for now, but will triple next year. In addition, the bank has decided to tap into $ 30 billion worth of bonds each month. The bond purchase will be discontinued by March 2022. The U.S. Fed has revealed that it is likely to triple in 2022. It is likely to double in 2023 and double in 2024. The bank said the policy review for the recovery of the economy was ongoing.

Estimated increased inflation

The bank has raised its inflation forecast for 2021 to 4.3 per cent from 4.2 per cent. Inflation is projected at 2.6 percent in 2022. Apart from this, the unemployment rate estimate for 2021 has been reduced from 4.8 per cent to 4.3 per cent. At the same time, the 2021 GDP estimate has been reduced from 5.9 per cent to 5.5 per cent. However, it has raised its GDP growth forecast for 2022 from 3.8 per cent to 4 per cent.

U.S. markets rallied after this decision

The US market rallied after the Fed’s policy announcement. The Dow Jones was up over 350 points. At the same time, the S&P 500 gained 1.6 percent. Nasdaq ended with a gain of 2.15%. Meanwhile, the dollar depreciated but bond yields rose. Brent and gold prices rose.

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