Minutes of the Federal Reserve meeting: Controversy continues.Will monetary policy continue to loosen or tighten?

Original title: "Fed meeting minutes hint to discuss tapering bond purchases, Summers accuses Fed of creating 'complacency' on inflation"

On Wednesday afternoon Eastern time, the Federal Reserve released the minutes of its April monetary policy meeting, and some Fed officials hoped to discuss scaling back the Fed's large-scale bond-buying program at future meetings. U.S. stocks extended losses following the release of the meeting minutes.

Opinion: The Fed's interest rate hike pushes the dollar to strengthen and commodities are under pressure: According to news on April 4, TD Securities said that the Fed's interest rate hike and the strengthening of the dollar have put pressure on commodities, but gold is still the focus of investors. The Federal Reserve's hawkish stance weighed on spot gold, while safe-haven demand and massive ETF inflows supported gold prices. Even if the U.S. dollar strengthens, safe-haven inflows will continue to support gold prices as long as no substantial progress is made in Russia-Ukraine ceasefire talks and de-escalation. (Golden Ten) [2022/4/4 14:02:29]

Former US Treasury Secretary Lawrence Summers believes that the Fed may be forced to reflexively tighten monetary policy, which will scare the market and even damage the real economy.

Fed took in $1.511 trillion in fixed-rate reverse repos: The Fed took in $1.511 trillion in fixed-rate reverse repos. (Golden Ten) [2022/1/7 8:30:46]

Summers sharply criticized the Fed's easy money policy, accusing the central bank of creating a "dangerous complacency" in financial markets and misjudging the economic situation.

Summers' comments, made at a conference hosted by the Federal Reserve Bank of Atlanta, marked a marked escalation in his attacks on the Fed. The Harvard economist, who served as the president's top adviser in the Democratic administration, criticized President Biden's fiscal stimulus earlier this year.

Federal Reserve: The surge in digital currencies coincides with high risk appetite: Federal Reserve: Overall, the vulnerability of the US financial system is roughly balanced. The vulnerability of the financial sector is relatively low, and non-bank financial leverage in some sectors has increased. After factoring in lower corporate taxes and current U.S. Treasury yields, pressure on valuations has mounted across a range of assets. Stocks have become more volatile, noting options-based measures of volatility approached historic norms in late February. The surge in digital currencies coincided with a high risk appetite. [2018/2/24]

Monetary and fiscal policymakers "significantly underestimate the risks to financial stability and conventional inflation that a prolonged period of very low interest rates poses," Summers said.

The Fed has vowed to keep U.S. interest rates near zero until the economic recovery reaches certain milestones, including full employment. The Fed also predicted that the surge in inflation would be temporary. The latest median forecast from Fed officials has ultra-low rates through at least 2024.

“Policy forecasts that interest rates may not rise for nearly three years are creating a dangerous sense of complacency,” Summers said.

Several Fed officials said this week that the central bank is closely monitoring economic developments and will be prepared to adjust policy if necessary.

St. Louis Federal Reserve Bank President James Bullard told reporters after speaking on Wednesday: "If we feel that the epidemic is basically over and it is not going to come back in some surprising way, then we can discuss adjusting monetary policy. Not there, but it does look close."

Atlanta Fed President Raphael Bostic made similar remarks in an interview on Bloomberg Television.

"We have to be very flexible in terms of our monitoring and policy response to the economy," Bostic said on Wednesday.

Long-dated bond yields jumped after the minutes, while stocks extended losses. The 10-year Treasury yield rose as high as 1.692%, up from 1.62% early Wednesday.

Author: Amy Liu

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