At their meeting on 16 and 17 March, officials of the U.S. Federal Reserve expressed confidence in an increasingly strong U.S. economic recovery and said they expect to keep interest rates near zero through 2023, barring unexpected jolts to the economy.
The group also showed no interest in curtailing the central bank’s bond purchase program, currently snapping up about $120 billion a month in federal and corporate securities, according to meeting minutes.
Several officials expressed the view that president Biden’s $1.9-trillion stimulus could help revive the small business sector.
Some in the meeting expressed concern that a stronger recovery could set off inflation at an unexpectedly fast pace, but most did not share the view, the minutes show.
The Fed will not raise interest rates until the economy establishes full employment, inflation reaches 2 percent, and is forecast to slightly exceed that benchmark for an extended time, Fed chair Jerome Powell has repeatedly stated.
The Fed also will not scale back its $120 billion bond purchases of government and corporate bonds per month until it sees “substantial further progress” toward those milestones, Powell has often said.
“A string” of months posting job growth of at least one million would “really begin to show progress toward our goals,” Powell said in addressing the spring meetings of the World Bank and IMF.
For now, “the recovery remains uneven and incomplete,” he said. “The unemployment rate in the bottom quartile is still 20 percent. There’s still 8.5 million people out of work.”
“This unevenness is a very serious issue,” he said.
TREND FORECAST: When the government inflation rate breaks above 3 percent yearly, the Fed will raise rates, which will, in turn, crash the equity markets and end the non-commercial real estate boom. And, as long noted, the government numbers do not represent the real inflation rate, which is much higher (see below). Among the reasons it was rigged was to reduce the cost of living index so the 64 million Americans getting social security would not receive more money each month.
As noted by John Williams’ www.shadowstats.com:
“The March 2021 ShadowStats Alternate CPI (1980 Base) rose to 10.4% year-to-year, up from 9.4% in February 2021 and against 9.1% in January 2021.
The ShadowStats Alternate CPI-U estimate restates current headline inflation to reverse the government’s inflation-reducing gimmicks of the last four decades, which were designed specifically to reduce/ understate COLAs. Related graphs and methodology are available to all on the updated ALTERNATE DATA tab above. Subscriber-only data downloads and an Inflation Calculator are available there, with extended details in pending No. 1460.
(April 9) March 2021 Producer Prices exploded across the board, with record levels of annualized First-Quarter 2021 Inflation of 8.99% for Total PPI-FD, 16.04% for PPI-FD Goods Sector and 5.62% for PPI-FD Services Sector (BLS).”
TREND FORECAST: As we have forecast, the higher interest rates go, the slower the housing market sector will rise. With the 30-year mortgage fixed rate having risen to a ten-month high at 3.36 percent, loan applications to buy a home fell 4.6 percent according to Mortgage Bankers Association. They reported that the higher rates plus a shortage of properties have made homes too expensive… especially for first-time buyers.
