This week, we got some new information from the Fed about how it’s handling economic recovery from the COVID pandemic.
On Wednesday, news broke that federal benchmark interest rates will be held near zero.
However, the Fed also signaled that it may start raising rates in 2022 – one year sooner than June’s prediction.
In a press conference, Fed Chairman Jerome Powell said the Fed is getting closer to achieving its goals of “substantial further progress” on inflation and employment.
He said, “For inflation, we appear to have achieved more than significant progress, substantial further progress. That part of the test is achieved in my view and the view of many others…My own view is the test for substantial further progress on employment is all but met.”
But most eyes were on Evergrande, a Chinese real estate group, this week.
The company is said to owe more than $300 billion to banks, bondholders, and more. However, analysts feel it won’t be able to pay current and upcoming bond interest bills.
In fact, on Thursday, Chinese authorities told local officials to prepare for the company’s potential demise.
A Wall Street Journal report claims officials said it was as if they were told to “get ready for the possible storm.” Those officials will have to step in at the last minute to try and prevent spillover effects.
According to CNBC, those include:
- Reviewing ways to take over real estate projects with developers
- Offsetting the impact on home buyers and jobs
- Setting up teams to prevent unrest
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