Wednesday , October 27 2021

Tapering in November; bond purchase will drop $ 15 billion a month By Investing.com



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© Reuters.

By Carjuan Creu

Investing.com – The minutes of the last monetary policy meeting of the Federal Open Market Committee from September 21 to 22 confirm that tapering will begin in mid-November or December.

Officials are debating what the mechanics will be to carry out the reduction of incentives and, as planned in the minutes, are considering gradually reducing the purchase of securities by 15 billion dollars a month, specifically $ 10 billion in bonds. the Treasury and $ 5 billion in mortgage-backed papers.

“The downsizing process could begin with monthly shopping schedules starting in mid-November or mid-December,” the minutes state..

Indeed, the acts reflect a greater consensus to begin gradually decreasing monthly purchases of $ 120 billion, which the Federal Reserve is carrying out as a monetary policy measure to stimulate the economy and ensure liquidity.

The minutes also confirm that it is possible that the rise in interest rates will run in 2022 and not in 2023 as planned, if the economic recovery remains within the stipulated targets.

Indeed, the persistence of inflation, above what was estimated, pressures the Fed to adjust the accommodative policy, mainly due to complications in the stabilization of production and supply channels.

The minutes reflect that now participants do not expect the bottlenecks to be completely resolved until next year or even later.

Read more: Fed increases pressure on ‘tapering’ announcement; inflation soars

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