There is a positive atmosphere as the markets analyze the Fed's normalization conditions regarding the decrease in inflation and that some of the decrease will be provided from here, and that it will not be in a rapid proactivity that will cause a hard landing to the economy. In other words, there is not a hawkish Fed mood in general after Powell's statements. War is still an important risk for the economies and aftershocks will also be in question, as sanctions steps are taken that cannot be quickly reversed in terms of going back to the past.
Stating that it is appropriate to continue interest rate increases, Powell said, "We have a plan to increase interest rates in a balanced way throughout the year and to shrink the balance sheet." The Fed has yet to decide whether to go with front-loading or gradual rate hikes, but from this perspective, it's more likely to be gradual. The minutes of the meeting will reveal more details about this. Regarding the balance sheet, it is expected that the announcement will be made in May and the asset reductions will start in June. The Fed has now exited the QE and entered the QT phase. In doing so, it will try to follow a path that will stabilize inflation over time, without reducing growth (actually, it will come down because the basic fact is the Russian crisis and supply chain breakage) and employment.
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