Accelerate the reduction of debt purchases and raise interest rates 3 times next year! Bitcoin rose 6%, Ethereum 12%

The Federal Standards Committee (FED) announced the main points of the last decision-making meeting of this year on the early morning of the 16th. It stated that starting from January next year, the scale of debt purchases will be doubled every month and the easing policy will be ended as soon as March. The FED also expects to make three increases after the easing exit interest. As soon as the news came out, the three major U.S. stock indexes closed up. The cryptocurrency market also rebounded after hearing the news. BTC and ETH each rose by 5-8%.

Fed: Accelerate the reduction of debt purchases. Raise interest rates 3 times next year! Bitcoin rose 6%, Ethereum 12%

The Federal Reserve Bank of America (FED) announced at 3 a.m. on the 16th in Taiwan that it will double the size of its monthly bond purchases (Taper) from January next year to $30 billion, which symbolizes the early exit of the easing policy in March next year. In addition, according to the bitmap released by the FED, they plan to raise interest rates at least three times after the reduction is completed.

QE may exit in March next year, and gradual interest rate hikes will also come

According to Bloomberg News, from January next year, the FED will only purchase 60 billion US dollars of bonds (half of November this year and two-thirds of December this year). If you look at the monthly reduction of 30 billion US dollars, the policy will be loose. It may officially exit in March next year.

According to the dot plot released by the FED, at least 18 FED officials expect to raise interest rates next year. Most of them believe that the interest rate will be raised by 3 yards (0.25% per yard). There will be at most three rate hikes in 2022, and two in 2023 and 2024. . Powell emphasized that he would not start raising interest rates before the end of the reduction in debt purchases.

Inflation continues to rise, and GDP expectations are adjusted

The FED's interest rate hike measures are undoubtedly aimed at alleviating inflation. According to FED data, it is expected that the inflation rate in 2021 will be pushed up to 5.3% (previously 4.2%), and categories other than food and energy will rise to 4.4% (previously 3.7%) . For 2022, overall inflation is predicted to be 2.6% and core categories are 2.7%, both higher than previous expectations.

The lack of labor is unresolved and inflation concerns are growing. After the press conference, the FED deleted the temporary inflation description (also because it was used as a derogatory term by many parties), and promised to maintain price stability while increasing the employment rate. The FED stated that 2021 The unemployment rate is estimated to fall to 4.3% from 4.8% in September.

In addition, the FED also updated the GDP growth rate data for 2021 to 5.5% (original 5.9%), 4% in 2022 (original 3.8%), and 2.2% in 2023 (original 2.5%).

U.S. stocks and cryptocurrency markets rebounded after hearing the news

As soon as the FED news came out, U.S. stocks and cryptocurrencies were excited. The three major U.S. stock indexes that were trading, the Dow Jones, S&P500, and Nasdaq Composite Index, all closed up.

The Dow Jones Industrial Average rose 1.08%, 383.25 points to 35,927.43, while the S&P rose 1.63%, 75.76 points to 4,709.85 points, and the Nasdaq Composite Index also rose 2.15% to 15,565.58 points.

The cryptocurrency market also showed an upward trend. The leading Bitcoin (BTC) rose by 5% within an hour, and the largest increase in the early morning was 6.4% to $49,500 (closed at 48,874 before the deadline); Ethereum (ETH) rose sharply within an hour 8%, the biggest increase in the early morning was 12.5% to US$4,097, and it was reported to US$4,020 before the deadline, successfully standing on the 4K line of defense.