ZB Academy：The Fed continues to maintain a near-zero benchmark interest rate
At 03:00 on November 6th, Hong Kong time, the Federal Reserve announced the November FOMC resolution to maintain the 0–0.25% range of the federal funds rate, in line with market expectations. After the resolution was issued, the US stock market continued its previous gains, with the three major indexes still rising above 2%, and the US dollar index maintaining a decline of nearly 1%. The biggest difference from the September FOMC resolution is that the interest rate resolution won the approval of all the voting committees. In September, two committee members raised objections to the newly announced “average inflation model”. In addition, the November FOMC resolution adopted the previous logic and discussion as a whole, and only made three adjustments to the description of the economic background. The description of the inflation target has not been adjusted.
In the previous November FOMC resolution, the description of the US economic activity and job market was adjusted from “recovery in recent months” to “sustained recovery”, but it still said that the overall level was significantly lower than the beginning of the year. At the same time, the description of the overall economic environment has also been adjusted from “increased in recent months” to “maintain easing.” In addition, the November resolution adjusted the description of the impact of the sharp drop in oil prices on inflation to the past tense.
In the previous resolution, the US Federal Reserve Board stated that it will maintain the benchmark interest rate at the current level and continue to increase its holdings of US Treasury bonds and mortgage bonds, at least at the current speed or the speed required to maintain the smooth operation of the market. This statement is in line with economists’ expectations that the US Central Bank will not take new monetary policy actions.
The Fed stated in its statement that weak demand and earlier oil price declines suppressed consumer price inflation. The statement pointed out that the rapid spread of the epidemic is causing huge economic difficulties in the United States and around the world. The overall financial situation is still accommodative, and it seeks to achieve an inflation rate moderately higher than 2% for a period of time so that the long-term inflation average can reach 2%. This partly reflects the policy measures to support the economy and the flow of credit to American households and businesses. The economic development path will largely depend on the spread of the epidemic. The current public health crisis will continue to put pressure on economic activity, employment and inflation in the short term, and pose considerable risks to the economic outlook in the medium term. And promised to use all tools to support the U.S. economy, and will purchase Treasury bonds and mortgage-backed bonds “at least at the current pace”. If there are risks that may hinder the achievement of the Fed’s goals, the Fed will be prepared to appropriately adjust its monetary policy stance. The Fed’s assessment will take into account public health, labor market conditions, inflationary pressures, inflation expectations, and financial and international developments.
As the Fed continues to increase its holdings of US Treasury bonds and mortgage bonds and expands its balance sheet by approximately US$3 trillion to US$7.1 trillion, this has raised concerns about future inflation. Since Bitcoin is a tool that is seen as a hedge against rising consumer prices and a weaker U.S. dollar, this decision by the Federal Reserve has also boosted investor demand for Bitcoin.
Affected by this news, payment giant Square’s announcement of positive news about bitcoin revenue in the third quarter, and the US election, bitcoin rose rapidly during the day. According to the official China currency market report, Bitcoin is now quoted at $15,805, breaking through the resistance level of $14,000 previously predicted by all parties. The 24-hour increase was 11.71%, and the final 24-hour price was $15,946.
About ZB Group
ZB Group was founded in 2012 with the goal of providing leadership to the blockchain development space and today manages a network that includes digital assets exchanges, wallets, capital ventures, research institutes, and media. The Group’s flagship platform is ZB.com, the industry leading digital asset exchange. The platform launched in early 2013 and boasts one of the world’s largest trading communities.
ZB Group also includes ZBG the innovative crypto trading platform, and BW.com, the world’s first mining-pool based exchange. Other holdings include wallet leader BitBank, as well as exchange brands ZBM, ZBX and Korea’s Bithi.
Industry intelligence and standards are headed by the recently launched ZB Nexus who embody the core values of ZB Group and open-source their reports and analysis for the public.
Learn more about ZB Group by visiting www.zb.com.
