The Dow Jones Industrial Average fell more than 100 points today after it was reported that The International Monetary Fund (IMF) has called on the Federal Reserve (Fed) to speed up interest rate hikes to curb inflation.
The Dow Jones Industrial Average was 34,495.01, minus 144.78, or 0.42%.
The IMF urged the Fed to speed up monetary policy tightening. amid rising inflation risks
“The United States’ gross domestic product (GDP) is now nearing its pre-Covid-19 trend. while the labor market is tight amid widespread inflationary pressures This creates a greater risk of inflation compared to developed economies. including the Eurozone”
“Therefore, it is appropriate for the Fed to accelerate a cut in its quantitative easing (QE) bond-buying program to pave the way for a policy rate hike,” the IMF said.
The US Department of Labor said that The Consumer Price Index (CPI), which measures inflation from consumer spending, jumped 6.2 percent in October year on year. which is the highest level since December 1990 And it was higher than analysts’ forecast of 5.9 percent from 5.4 percent in September.
Earlier, Fed Chairman Jerome Powell signaled the end of QE earlier than expected. This will pave the way for the Fed to raise interest rates faster than expected.
Mr Powell said The Fed may cut its QE limit by more than $15 billion a month, with the Fed to discuss its monetary policy meeting Dec. 14-15.
The Fed’s monetary policy committee voted to keep the short-term interest rate at 0.00-0.25 percent at its Nov. 3 meeting, and the Fed will cut its QE limit by $15 billion a month starting in November. Such a reduction in the QE limit will mean the Fed will end QE altogether by the middle of 2022.
Goldman Sachs released a report predicting that The Fed will increase its QE limit cut to $30 billion a month, doubling from $15 billion a month, paving the way for the Fed to raise interest rates in June 2022. This is the first rate hike since the United States faces the COVID-19 pandemic in 2020.
The Dow jumped more than 100 points at first, with investors looking at lower-than-expected non-farm payrolls. will be a factor supporting the Fed to slow down interest rate hikes
The US Department of Labor said Non-farm payrolls rose just 210,000 in November. That was 581,000 positions lower than analysts had expected.
The unemployment rate fell to 4.2%, below analysts’ expectations of 4.5%.