Insider News: A Former Federal Reserve Insider Predicts How The Bank Will Behave In The Months Ahead

Mar 16, 2022

Insider News: A Former Federal Reserve Insider Predicts How The Bank Will Behave In The Months Ahead

This week, all eyes will be on the Federal Reserve, which is likely to increase interest rates for the first time in more than three years.

The financial climate in the United States has altered dramatically in the past year, especially in February, and predictions for how the central bank would cope with the unstable situation have shifted.

Fed Chairman Jerome Powell regularly said in 2021 that higher inflation would be temporary until abandoning that notion in November. He then said that the Federal Reserve would double the pace at which it planned to reduce asset purchases and that it would seek to raise interest rates three times in 2022, beginning with the March Federal Open Market Committee session.

On Wall Street, the number of rate rises expected this year has climbed to six or seven. But, in recent weeks, when Russia's attack on Ukraine inflamed an already-inflationary climate around the globe, there has been less clarity about how the Fed would manage monetary policy for the remainder of the year.

According to Danielle DiMartino Booth, a former adviser at the Federal Reserve Bank of Dallas, the Fed would keep its foot on the tightening gas pedal to contain inflation despite the conflict in Europe.

"I wish I could predict that the Ukraine scenario will cause the Fed to take a bigger step back," Booth commented on Monday. "I believe they'll keep going until something breaks. Except for inflation, nothing is broken at the moment."

Booth predicted that the credit market, not a further fall in assets, would " break " and lead the Federal Reserve to change its tightening position.

Booth, now the CEO and chief strategist at financial research firm Quill Intelligence, noted that political pressure on the Fed is also playing a different role in their approach than in the past, with politicians calling for the Fed to tighten policy rather than keep rates artificially low to stimulate economic activity.

She thinks the central bank is aware that it would ultimately cause a recession and chastised the institution for not acting sooner to tighten.

"The Federal Reserve passed up a chance to begin tightening policy in 2021, which might have helped to curb runaway increases in house prices generated by the Fed," Booth stated. "Now, the Fed is stuck between rising interest rates in the face of a weakening economy and the start of the Russia/Ukraine conflict, which adds to economic uncertainty and inflationary pressures."

"Rather than being able to relax monetary policy in the face of a slowing economy, the Fed is beginning on a tightening campaign," she added.

According to Booth, stagflation (above-trend inflation and below-trend economic growth) looks to be on the horizon. She predicted that GDP growth would be negative in the first quarter and that inflation would "likely" soar beyond 10% in the coming months as a consequence of the Ukraine conflict and its influence on gas and food costs.

According to Booth, the Fed's strategy will concentrate more on decreasing its balance sheet by selling assets it holds or not replacing those that mature rather than raising interest rates.

"I believe they'll get more mileage, more leverage, out of lowering the balance sheet," she said. "Recent speeches from Lorie Logan, who runs the New York Fed's markets desk, and John Williams, who is the president of the New York Fed and a permanent voter on the FOMC...they've indicated that they're going to be extremely aggressive about shrinking the balance sheet than they've been in the past."

The Federal Reserve's balance sheet is now worth $8.9 trillion, more than double what it was before the COVID crisis. This has resulted in more liquidity in the economy, contributing to both the economic recovery and the 40-year-high inflation.

The bank is anticipated to begin lowering its balance sheet later this year, but any changes might come during this week's conference. Economists and investors anticipate a 25 basis point increase in the federal funds rate. Powell has recently stated his desire to do so.

Subscribe Our Newsletter

Ex-oneZero Sales Head Stuart Brock Joins B2PRIME

Hazem

B2PRIME Announces Ex-oneZero Sales Head Stuart Brock as a New Institutional Business Development Manager

B2PRIME Group, a global leader in institutional-grade liquidity solutions, has announced a new appointment in senior management following the recent hires and growth the company has undergone. Stuart Brock, the former Head of Institutional Sales at oneZero, will become the new Institutional Business Development Manager at B2PRIME, bringing his impressive portfolio and expertise to one […]

Companies
Not All Cryptos Are Scarce Like Bitcoin
Not All Cryptos Are Scarce Like Bitcoin

One of the most significant reasons why bitcoin continues to make national headlines is its scarcity. Bitcoin is regaining its reputation as "digital gold" as major advisers such as JPMorgan tout it as an inflation hedge as the US Treasury issues more fiat money.

Crypto
B2BROKER Liquidity B2BROKER Liquidity
Sponsored
Alexander

Best Bitcoin Wallets in 2023: Comparing Features, Security, and Usability
Bitcoin, the dominant cryptocurrency in the market, has gained enormous popularity as a decentralised digital currency. According to CoinMarketCap data, there are currently 48.2 million wallet addresses holding Bitcoin, and this number is trending upward.

discover
How to Spot Cryptocurrency Scams

Alexander

How to Spot Cryptocurrency Scams

The cryptocurrency world is still relatively new and uncharted territory. Many of the concepts at play in this new economy can be complex and difficult to understand. This can make it challenging for those who are new to the space to get a grasp on how everything works.

Blockchain
Contact us bg

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Hazem

    Grok vs ChatGPT: What’s the Best AI Assistant You Need in 2025

    Grok vs ChatGPT

    Сonstantine

    How to Choose the Right Liquidity Provider for Your Brokerage

    How to Choose the Right Liquidity Provider for Your Brokerage

    Сonstantine

    Low-Latency Trading Defined: Speed, Strategy and Technology

    Low-Latency Trading Explained

    Hazem

    How Liquidity Depth Affects Slippage in High-Volume Trading

    Liquidity depth and slippage in trading

    Hazem

    What is FIX API Liquidity Connection and How Does it Power Institutional Trading?

    FIX API in institutional trading

    Сonstantine

    OTC Trading Strategies and Technologies to Succeed in Over-the-Counter Markets

    OTC Trading Strategies

    Alexander

    What is OTC Trading? A Complete Guide for 2025

    what is OTC

    Alexander

    Synthetic Futures: A Trader’s Guide to Replicating Positions with Options

    How to Trade Synthetic Futures

    Сonstantine

    Order Book Depth: What It Is And Why It Matters?

    Order Book Depth What It is And Why It Matters

    Alexander

    Spot vs Perpetual Futures: Which Is Right for You?

    Spot vs Perpetual Futures explained

    Hazem

    5 Reasons Traders Are Switching to Perpetual Futures

    5 Reasons to Switch to Perpetual Futures

    Constantine

    Top 3 Liquidity Challenges Facing New Exchanges and How to Solve Them

    Top 3 Liquidity Challenges Facing New Exchanges Today

    Constantine

    Financial Planning in the Cryptocurrency Era — Master Crypto and Digital Asset Strategies

    Financial Planning in the Cryptocurrency Era

    Hazem

    Best Platforms to Trade Perpetual Futures in 2025

    Best platforms to trade perpetual futures in 2025

    Alex

    Top 10 Fintech Website Development Agencies for 2025

    Best Fintech Website Development Agencies for 2025

    Сonstantine

    Internal vs External Range Liquidity In ICT Trading Explained

    Internal vs External Range Liquidity In ICT Trading

    Constantine

    Portfolio Backtesting — Tools, Metrics, and Methods Explained

    Portfolio Backtesting

    Сonstantine

    ICT Trading Explained: Smart Money Concepts, Tools and Setups

    ICT Trading Explained

    Сonstantine

    CFD Trading Strategies: A Practical Guide to Risk and Execution

    CFD Trading Strategies

    Alexander

    What is a Fair Value Gap? A Guide to Trading Market Imbalances

    What is Fair Value Gap

    Vitaliy

    Triangle Patterns in Trading: Mastering Ascending, Descending & Symmetrical Strategies for Maximum Profit

    Triangle Patterns in Trading: Ascending, Descending & Symmetrical Guide

    Alexander

    What Is COTI? Payments, Token & Price Prediction

    What is a COTI coin

    Constantine

    Best Copy Trading Software in 2025

    Best Copy Trading Software in 2025

    Alex

    What Is an AI Agent? The Future of Finance Explained

    AI Agent Explained
    liquidity-provider-logo
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
      • White Label Brokerage Platforms
      • Broker CRM Platforms
    [email protected]

    © 2024 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.