Monetary Policy(by Mack Wilowski) - 趙永祥的數位歷程檔

Monetary policy is a set of tools used by a nation’s central bank to control the overall money supply, promote economic growth, and employ strategies such as revising interest rates and changing bank reserve requirements.

In the United States, the Federal Reserve implements monetary policy through a dual mandate to achieve maximum employment while keeping inflation in check.

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Why is 'Monetary Policy' the Term of the Day?

This week, Fed Chair Jerome Powell will testify before Congress as part of his semiannual testimony on monetary policy, speaking before the Senate Banking Committee today and the House Financial Services Committee tomorrow.

Powell’s testimony could offer clues regarding the near-term trajectory of the Fed’s interest rate hikes. With hotter-than-expected inflation figures in January, Fed policymakers could raise interest rates more aggressively in the upcoming months, and keep rates higher for longer. Traders are now projecting at least three additional rate hikes of 25 basis points (bps) this year, resulting in a terminal fed funds rate between 5.25% and 5.5% by July, according to fed funds futures data published by CME Group.

The U.S. central bank has raised its benchmark federal funds rate by a cumulative 450 basis points over the past 12 months, in the fastest tightening cycle in over four decades. The annual rate of inflation as tracked by the Consumer Price Index (CPI) hit a 40-year high of 9.1% in June of last year, led by surging energy costs in the first half of the year. It’s moderated since, at 6.4% in January as prices for gasoline and other goods have come down, but remains well above the Fed’s target rate of 2%.

-Mack