The Federal Reserve’s new decisions about the interest rates

At Wednesday’s meeting, the Federal Reserve will make important decisions that will significantly impact interest rate policies and will increase interest rates for the first time next year. Based on the past statements and decisions, it is expected that they will change their perspective towards inflation and no longer consider it a temporary issue.

The market activists have an eye on the Federal Reserve’s $8.7 trillion balance sheet and whether it will change the timing of its decline. Thus, based on the market predictions, the Federal Reserve will accelerate its bond-buying program and change its expiration date from June to March. In this case, the Federal Reserve is expected to release new statistics, which will probably indicate two or three increasing phases in the interest rate in the new year and three to four increasing phases in 2023.

At the end of this two-day meeting, the authorities must take another step for controlling the inflation rate, because inflation is no longer considered a temporary problem. On the other hand, rising prices can impose a more significant threat to the country’s economy. Nevertheless, statistics show that the consumer price index increased by 6.8% in November. Earlier in the year 2020, with coronavirus outbreak, the Federal Reserve implemented its quantitative easing and reduced Target Federal Fund Rate Range to zero. Federal Reserve officials began discussing a rapid decrease in mid-November, and they were able to change market expectations successfully.