While analyzing the Fed’s decisions; We have observed that the current momentum of the economy instills more pass-through to the upward revision in short-term projections, but the effects diminish as the term gets longer. It constitutes a valid situation for the whole of the main trio of growth, inflation and employment. In other words, when the supported growing economy effect is left behind, it is observed that there will still be differences if the economy is compared with the state without crisis supports in 2019. Especially on the basis of employment …
Powell’s economic concerns are partially justified at this point. What breaks the equation is that economic activity is still in an upward trend. The package that includes new infrastructure projects that will come after financial incentives, if realized, will mean more work in many sectors. At this point, of course, it is necessary to be aware that the way out of the crisis is not through access to cheap financing, but through direct grants. Otherwise, there wouldn’t have been this much fuss for financial incentives alongside QE.
In its original plan, the Fed is at the point of not tightening before the economy returns to 2019 dynamics. However, according to the previous FOMC, the change of opinion of a few members will create more space for discussion within the Bank to maintain this policy plan. In terms of the future of QE; Good data will compress the Fed, bad data will save time for them.
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Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı