Fed’s Powell indicated last month that tapering could begin later this year
NS federal Reserve It signaled at the conclusion of its two-day meeting this week that it may soon begin to slow down its aggressive bond-buying program, the first step that policymakers will take to dial back pandemic-era support. American economy.
The US central bank, as widely expected, kept the benchmark federal funds rate between 0% and 0.25%, where it has been since March 2020, when COVID-19 forced an unprecedented shutdown of the country’s economy. force to. The Fed will continue to purchase $120 billion in bonds each month, a policy known as “quantitative easing” designed to keep credit cheaper.
But updated economic projections released by the Fed show officials expect rates to be raised once to about 0.5% by 2022, ahead of estimates in May. At the time, the average official did not expect rates to move until 2023. Now, nine out of 18 Fed officials at the meeting said they expect to start raising rates sometime in 2022. All except one official in the rate hike in 2023.
For months, the US central bank has been grappling with how to manage an exit from ultra-easy monetary policies without triggering a market sell-off in March 2020. Even though inflation is running well above the Fed’s preferred target of 2%, there are 8.4 million unemployed Americans.
“If progress continues as expected, the committee decides that asset purchase momentum may soon slow down,” the Fed said in its post-meeting statement.
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