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Federal Reserve Keeps Interest Rates Unchanged

After the first interest rate meeting this year, the US Federal Reserve announced that it would keep interest rates unchanged, in line with market expectations. But at the same time, it announced that it will significantly reduce the current scale of bond purchases to US$30 billion from February, of which US$20 billion is conventional bonds and US$10 billion is mortgage-backed securities (MBS). An appropriate rate hike is expected soon. This is mainly due to the fact that the annual inflation rate is well above 2%, coupled with the strong performance of the labor market, in addition, the bureau said that the shrinkage of the balance sheet is "expected". However, Chairman Powell said that the bureau has not yet made a decision on the rate and path of interest rate hikes. This meeting is mainly to formulate guidelines for the plan to shrink the balance sheet of nearly 9 trillion US dollars. The bureau will discuss it at the next two meetings. Shrinking the balance sheet, saying that the shrinking of the balance sheet will happen after the start of interest rate hikes, and suggesting that the size of bond holdings may be significantly reduced in the future.
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