Jerome Powell, chairman of the US Central Bank (Fed), dismissed inflation concerns while revising this year’s economic growth forecast significantly. Even if the economy rebounded sharply, a message was sent saying that it would maintain zero interest rates until 2023.
The global financial market quickly regained stability, with stock prices rising and bond yields falling despite the absence of aggressive market intervention. CNBC said, “Chairman Powell showed the appearance of a Maestro (master) by alleviating the unrest in the stocks, bonds, and dollar markets.”
Powell said in a briefing immediately after a regular meeting of the Federal Open Markets Committee (FOMC) on the 17th (local time) that he would not change the stance of currency expansion until he confirmed significant progress in economic indicators. Earlier, FOMC unanimously froze the base rate, which is 0~0.25% per year. It also decided to continue an asset purchase program worth $120 billion per month.
Powell emphasized, “There is no need to worry until we give a signal,” said Powell, in relation to market concerns that tapering (reduction in bond purchases) will begin within this year. In addition, he said, “I will not change the policy tone even if prices temporarily rise above 2%.”
At the same time, the growth rate and inflation outlook for this year have been greatly raised, showing strong confidence in the economic recovery. The Fed predicts that the US growth rate will reach 6.5% this year thanks to the corona 19 vaccination and stimulus measures. It was 2.3 percentage points higher than last December’s forecast (4.2%). In reality, it is the highest record in 37 years since 1984 (7.2%). This is a figure that could outperform China, which suggested ‘6% or more’ as a growth target this year. 1976 was the last time the US growth rate surpassed China.
The US unemployment rate, which recorded 6.2% last month, is expected to fall to 4.5% at the end of the year. It is expected to reach full employment level (3.5%) by 2023.
In the Seoul foreign exchange market on the 18th, the won-dollar exchange rate fell 6 won 50 points (increase in the value of the won) and recorded 1123 won 70 points per dollar. The exchange rate started before 1122 won 50, which fell 7 won 70 before, but afterwards, some of the declines were returned. The exchange rate, which soared to 1142 won 70 on the 10th, has continued to decline since. The 3-year Treasury bond rate fell 0.044 percentage points to close at 1.133% per year.
New York = Correspondent Jaegil Cho/Reporter Ikhwan Kim [email protected]
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