WASHINGTON, Nov 4 ― The Federal Reserve will begin to slow its stimulus bond purchases this month as the US economy makes a solid recovery from the pandemic, but the central bank will be patient before raising interest rates, Fed Chair Jerome Powell said yesterday. Amid growing concern about...
WASHINGTON, Nov 4 ― The Federal Reserve will begin to slow its stimulus bond purchases this month as the US economy makes a solid recovery from the pandemic, but the central bank will be patient before raising interest rates, Fed Chair Jerome Powell said yesterday.
The Fed slashed the benchmark borrowing rate to zero in March 2020 just after the pandemic began on US shores, causing widespread business shutdowns. But supply bottlenecks and shortages have caused prices to rise, prompting criticism that the Fed has become overly complacent about inflation risks.As a first step to walk back the stimulus, the Fed's policy-setting Federal Open Market Committee announced that this month it will start reducing the monthly pace of purchases by US$10 billion for Treasuries and US$5 billion for mortgage-backed securities.
Addressing critics of his patient stance, Powell, who is awaiting word on whether President Joe Biden will name him for a second term, said, “I don't think we are behind the curve. I believe policy is well-positioned to address the range of plausible outcomes.”Diane Swonk of Grant Thornton expects both, with three rate hikes next year.
“It's appropriate for us to see what the labour market and what the economy look like when they heal further.”
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