FOMC Official Remains Uncertain About Interest Rate Hike

03/11/2023 13:09 • NFT Newsflash • 148 views

According to reports, on March 11, Balkin, chairman of the FOMC Voting Committee and Richmond Fed in 2024, said in an interview on Friday that he had not made a decision on the upcoming interest rate increase (he had been advocating a 25 basis point interest rate increase) under the condition of continued inflation. At the same time, he also said, “At any particular meeting, I always said that I am open to any outcome”, and pointed out that he “will never give up any possibility”. “The last interest rate increase of 25bp does not mean that every meeting is 25bp”. Balkin’s statement echoes Powell’s testimony this week. At that time, Powell said that he was open to a new interest rate increase of 50bp if future data showed that it was necessary. With regard to the potential impact of the Silicon Valley banking incident on the Federal Reserve’s monetary policy, Balkin believed that he mainly focused on economic demand, and financial stability “may or may not affect”, “I will continue to respond until we control inflation”. He added that he would not be surprised if the economic forecast summary released at the March meeting was revised to be higher than the expected level of 5.1% in December last year. (Financial Times)

Barkin, the Federal Reserve, is open to the resumption of a 50bp interest rate increase

Analysis based on this information:

The chairman of the FOMC Voting Committee, Balkin, has stated that he has not yet made a decision about the upcoming interest rate increase, despite previously advocating for a 25 basis point hike if inflation continued. In an interview, Balkin emphasized his openness to any outcome and declared that he would never give up any possibility. His statement echoes Powell’s recent testimony where he indicated that he was open to a new interest rate increase of 50bp if future data showed its necessity.

Balkin expressed his belief that the Silicon Valley banking incident’s impact on the Federal Reserve’s monetary policy focus is mainly on economic demand, and financial stability might or might not have any effect. He stated that he will continue to respond until the inflation is under control. Balkin further added that he would not be surprised if the economic forecast summary released at the March meeting is revised higher than the expected level of 5.1% in December 2020.

From Balkin’s statement, it is clear that FOMC officials are still assessing the situation regarding the interest rate hike. While the Fed’s open stance towards interest rate remains, highlighting the fact that every meeting’s change is not fixed at 25bp, it is uncertain whether the Federal Reserve will go ahead with the proposed interest rate hike.

However, Balkin’s emphasis on the possibility of an increase is noteworthy as it aligns with Powell’s viewpoint. Thus, it can be concluded that the FOMC recognizes the potential risk of inflation and may raise interest rates if the inflation persists.

In summary, Balkin’s statement indicates that the FOMC is taking a cautious approach towards the interest rate hike. The monetary policy of the Federal Reserve remains affected by economic demand and inflation control, and the Silicon Valley banking incident may or may not affect it. Any decision on the interest rate hike will depend on the situation’s development and data analysis.

Overall, the statement highlights the FOMC’s focus on data analysis and the importance of ensuring economic stability.

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FOMC Official Remains Uncertain About Interest Rate Hike

Barkin, the Federal Reserve, is open to the resumption of a 50bp interest rate increase

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