"Report" experts: Fed to speed up monetary tightening

Baku. 26 July. REPORT.AZ/ The U.S. Federal Reserves System (Fed) has been reporting for a while that it is going to reduce its balance. The analytical group of Report informs that in June, Fed reported that it was goin to start reducing its balance in the amount of 4,47 trillion USD. Currently, the term of a 50-billion-USD bond is about to expire. In turn, Fed replaces them by purchasing new bonds. In the near future, Fed will begin to remove the expired bonds from its balance. Thus, it will lead to the decreasing of liquidity. The aim of Fed's decision is to decrease inflation and chill the economy. However, at present, the economic growth in the U.S. is not that strong, and the iflation is lower than the targeted level (2%) and equal to 1,6%

The analytical group of Report informs, the fact that Fed has made the decision to reduce its balance at such a time is connected with its future forecasts. Thus, according to Fed, in a mid-term perspective, the U.S. economy will start to grow, and inflation will speed up. For this very reason, Fed is trying to take adequate steps in time. The devaluation of dollar will positively impact increasing export and nearing the inflation rate by the U.S.

Due to Fed's reduction of its balance, it will turn from a net buyer into a net seller on the bond market. It will lead to the growth of interests. Report analysts inform, as a result of Fed's reduction of its balance, investors may start mass sales on the bond market, and it may lead to financial crisis. Investors have refused purchasing bonds with low interests, started awaiting the period of higher interests, the free funds, owned by them, got into exchanges and led to the growth of indexes and reaching new records every day.

Such a situation will continue till Fed increases interests by 2,5-3%. In its turn, Fed is convcerned with the growth of stock exchanges. In ther words, Fed will speed up monetary tightening at further meetings.