Washington: federal Reserve Wednesday cleared the way for reducing their monthly bond purchases “soon” and indicated interest rate hikes could happen faster than expected, with nine out of 18 US central bank policymakers raising borrowing costs in 2022. will need to grow.
The actions, covered in the Fed’s latest policy statement and separate economic projections, represent a blatant tilt by the central bank that has kept inflation this year running at 4.2%, more than double its target rate, and its in a position to take action against .
The current target interest rate was kept constant in the range of 0% to 0.25%.
The Fed said in a unanimous statement that although the recovery of some parts of the economy had slowed while acknowledging the new surge of the pandemic, the overall indicator “has continued to strengthen.”
The Fed said that if this progress “continues broadly as expected, the committee’s decision that a moderation in the pace of asset purchases may soon be warranted”.
The statement was widely expected to signal that the Fed would soon begin closing $120 billion in monthly bond purchases it is making to blunt the economic impact of the coronavirus pandemic.
But it was in his macroeconomic outlook that Fed policymakers made a less anticipated change.
The inflation outlook for 2021 increased by 0.8 percent to 4.2% and the unemployment rate increased from that seen later this year.
In turn, the two officials brought forward their projected timeline for 2022 to raise the Fed’s benchmark overnight interest rate slightly above current near-zero levels, enough to raise the average projection for the next year to 0.3%.
The actions, covered in the Fed’s latest policy statement and separate economic projections, represent a blatant tilt by the central bank that has kept inflation this year running at 4.2%, more than double its target rate, and its in a position to take action against .
The current target interest rate was kept constant in the range of 0% to 0.25%.
The Fed said in a unanimous statement that although the recovery of some parts of the economy had slowed while acknowledging the new surge of the pandemic, the overall indicator “has continued to strengthen.”
The Fed said that if this progress “continues broadly as expected, the committee’s decision that a moderation in the pace of asset purchases may soon be warranted”.
The statement was widely expected to signal that the Fed would soon begin closing $120 billion in monthly bond purchases it is making to blunt the economic impact of the coronavirus pandemic.
But it was in his macroeconomic outlook that Fed policymakers made a less anticipated change.
The inflation outlook for 2021 increased by 0.8 percent to 4.2% and the unemployment rate increased from that seen later this year.
In turn, the two officials brought forward their projected timeline for 2022 to raise the Fed’s benchmark overnight interest rate slightly above current near-zero levels, enough to raise the average projection for the next year to 0.3%.
.