Fed May Start ‘Gradual Tapering’ Next Month

Federal Reserve officials agreed at the their last meeting that if the economy continued to improve, they could start reducing their monthly bond purchases as soon as next month and bring them to an end by the middle of 2022.

The discussion was revealed in the minutes of the Fed’s Sept. 21-22 meeting, released Wednesday.

“Participants generally assessed that, provided that the economic recovery remained broadly on track, a gradual tapering process that concluded around the middle of next year would likely be appropriate,” the minutes said.

Last December, the Fed said that it would buy $120 billion a month in bonds until the economy had made “substantial progress” toward its goals of maximum employment and inflation that averages 2% over time. The bond purchases are intended to spur more borrowing and spending by keeping longer-term interest rates low. The Fed has also pegged its short-term benchmark rate at nearly zero.

At a news conference following the September meeting, Fed Chair Jerome Powell said that such progress had been made with inflation and the test was “all but met” when it came to employment.

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{Matzav.com}