Federal Reserve Signals It May Soon Slow Bond Purchases
The New York Times
The Federal Reserve said it could soon slow its large-scale purchases of government-backed debt and indicated it might raise interest rates in 2022.
Federal Reserve officials indicated on Wednesday that they expect to soon slow the asset purchases they have been using to support the economy and predicted they may raise interest rates next year, sending a clear signal that policymakers are preparing to pivot away from full-blast monetary help as the business environment snaps back from the pandemic shock.
“If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” the policy-setting Federal Open Market Committee said in its September statement. The new phrasing eliminated wording that had promised to assess progress over “coming meetings,” suggesting that a formal announcement of the slowdown could come as early as the central bank’s next gathering in November.
Fed officials confront a complicated backdrop nearly 20 months after the coronavirus pandemic first shook the American economy. Business has rebounded as consumers spend strongly, helped along by repeated government stimulus checks and other benefits. But the virus persists and many adults remain unvaccinated, preventing a full return to normal.
