[FOMC 그후] ① US Fed freezes’zero interest rate’… Goldilocks dreams of economy

The US Federal Open Market Committee (FOMC) announced a freeze on’zero interest rates’ on the 17th (local time). The dominant evaluation is that the anxiety that recently pressured financial markets such as the New York Stock Exchange has been resolved.

The Federal Reserve System (Fed and Fed) decided to maintain the standard interest rate of 0~0.25% at the FOMC regular meeting for two days from the day before.

Prior to this, the market was relieved by the fear of the Fed’s monetary policy changes due to the faster-than-expected economic recovery and inflation rate. In particular, Wall Street (Wall Street) praised Fed Chair Jerome Powell’s changed attitude.

Jack Leader Chief Investment Officer (CIO) of Black Rock, the world’s largest asset manager, pointed out that the FOMC regular meeting on the 15th will be’March madness’ to the market, and the Fed’s policy communication It has been urged to change the way it is.

He pointed out that the passive attitude the Fed has been pursuing has increased market volatility, and to resolve this, the Fed must come up with a concrete policy explanation that can persuade the market even now.

◆’Maestro’ Powell’s Dove Power…’Goldilocks’ Era Ona

Wall Street assessed that the Fed’s decision gave the market an expectation of realizing’Goldilocks’ by combining the FOMC statement released on the day and the remarks of Fed Chair Jerome Powell.

This is because the Fed decided to maintain the monetary easing policy regardless of interest rates, inflation and asset prices, focusing on recovering the economy that had collapsed due to the novel coronavirus infection (Corona 19) pandemic (a global pandemic) for the time being.

Anu Garger, senior global investment strategist at Commonwealth Financial Network, said in an interview with the US economic media CNBC, “(The Fed) coexisted with strong economic growth, moderately rising prices, improved corporate performance, and a very modest monetary policy situation. “Goldilocks” has formed expectations.”

In fact, on that day, the Dow Jones 30 Industrial Average of the New York Stock Exchange (NYSE) surged after the announcement of the FOMC statement, reaching the 33,000 mark for the first time ever.

Wall Street agreed that the Fed raised the US economic growth forecast to 6.5% this year, 2.3 percentage points (p) higher than last December’s 4.2%, while dismissing concerns about inflation gave the market a sense of relief.

FOMC members adjusted their original personal consumption expenditure (PCE) price index forecast to 2.2% this year, but projected that it will fall back to 2.0% in 2022, clearing market concerns. The Fed predicted that this year’s inflation rate would exceed the Fed’s target of 2.0%, but this is only a temporary phenomenon due to the base effect of the pandemic, and it is not a level of concern.

Fed Chairman Jerome Powell said at a press conference after the statement was released. “Substantial further progress is required to be reviewed.”

With this, Mona Mahajan, an investment strategist at Allianz Global Investors, predicted that the Fed would not consider policy changes even if inflation levels exceed 2% for the time being.

Wall Street, who had been aiming an arrow of criticism at Powell, cheered the mayor’s reaction, pouring out his praise.

Morgan Stanley Investment Management’s Director of Global Macro Strategy, Jim Carson, told CNBC, “I think (this day) was the best of the Powell press conference. He completed the mission.” He praised that the reflation trade (price recovery transaction) was not damaged by breaking through the dissatisfaction of the market that Chairman Powell had avoided so far.

Greg Faranello, head of American interest rates at Ameribet Securities, also described Powell as a’maestro’.