In the early morning of March 17, the Federal Reserve released its latest statement on interest rate discussion. Members voted 8-1 to raise the target range of policy interest rate by 25bp to 0.25-0.5%, and expected that "continuous interest rate increase is appropriate". After the start of interest rate hike, the Federal Reserve is expected to open the contraction table at a subsequent meeting, but did not mention the specific time point and operation details. The Fed's statement on interest rate discussion deleted the "negative impact of the epidemic", continued to believe that "economic activity and employment indicators remain strong", and stressed that "inflation remains high, reflecting the supply-demand imbalance related to the pandemic, rising energy prices and broader price pressure".
In terms of economic forecast, the Federal Reserve significantly raised its inflation expectation in 2022 and lowered its economic growth expectation. The GDP growth expectation in 2022 was significantly reduced from 4% to 2.8%, and the inflation expectations of PCE and core PCE were significantly increased from 2.6% and 2.7% to 4.3% and 4.1% respectively, reflecting the Fed's concern about the "stagflation" pressure during the year. However, the Fed's forecast of the unemployment rate remained unchanged, suggesting that the job market has achieved "full employment" and sustainability.
