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Jackson Hole: When will the Federal Reserve curb the flow of money?

2021-08-27T07:14:14.166Z


While prices in the USA and Europe are already rising significantly, the Fed and ECB are pumping hundreds of billions of dollars and euros into the market every month. Economists expect Fed Chairman Jerome Powell to name at least a point in time today for a change of course in monetary policy.


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Fed Chairman Jerome Powell: It is not yet clear when the bond purchases will begin to melt (tapering)

Photo: DREW ANGERER / AFP

The financial world looks to the US Federal Reserve Conference in Jackson Hole today.

At the event, which is only offered online for the second year in a row due to the corona pandemic, Fed Chairman Jerome Powell will give a speech that experts hope will provide a clue to future monetary policy.

The Federal Reserve is currently purchasing $ 120 billion a month in securities to prop up the economy that has been hit by the Corona crisis. Given the upswing, the buying meltdown debate is in full swing. The timetable for this so-called "tapering" is not yet in place.

Most stockbrokers do not expect the decision on the exact start of the maneuver until one of the upcoming Fed meetings.

Dallas Fed District Chief Robert Kaplan urges a resolution in September.

Many observers expect that purchases could be reduced around the end of the year - including capital market expert Jürgen Callies from asset manager Meag.

In his opinion, the Fed symposium should now be more of a message of calm for the capital markets, which have benefited from the Fed's loose line.

There is concern in the market that if the Fed does not start tapering soon, it could continue to fuel the already strong inflation.

You then run the risk of setting in motion an inflation spiral that will be difficult to stop again.

South Korea's central bank is pushing ahead with a rate hike

The central bank of South Korea is the first major central bank in Asia to push ahead with an increase in its key interest rate.

As the central bank announced on Thursday in Seoul after its regular interest rate meeting, the key interest rate will rise by 0.25 percentage points to 0.75 percent.

It is the first increase since the beginning of the Corona crisis in 2020.

According to Federal Reserve Chairman Lee Ju-yeol, the higher interest rates are intended to prevent exaggerations in the financial markets.

In South Korea - the country belongs to the G20 group of the leading economies - in addition to share prices, property prices, among other things, have risen sharply - a consequence of the extremely loose monetary policy with unusually low interest rates.

In addition, Lee justified the tighter course with the economic recovery and rising inflationary pressure.

However, the head of the central bank remained cautious about the interest rate outlook: Monetary policy remains loose, although further moderate rate hikes are possible.

The course of monetary policy depends on the progress of the pandemic and the actions of other major central banks.

la / dpa / reuters

Source: spiegel

All news articles on 2021-08-27

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