Federal Reserve to announce end of bond-buying program

WASHINGTON (UPI) — The Federal Reserve opened a two-day meeting on Tuesday at which Chairman Jerome Powell is expected to announce the tapering of the Fed’s bond-buying program, which was enacted as an emergency response to COVID-19.

Powell and the Fed have resisted ending the program so far, but there’s now pressure to start winding down $120 billion in monthly purchases due to changing economic conditions.

Amid rising inflation, Powell has indicated that the Federal Reserve Board will begin to taper off the bond program.

The tapering is expected to begin sometime this month or next, and completely disappear by the middle of 2022.

The Fed often fights rising inflation with increases to key interest rates. However, Powell has previously said that an end to the bomb program doesn’t necessarily signal an immediate rate hike.

The Federal Reserve hasn’t increased interest rates since the start of the coronavirus pandemic. Most forecasts project that the first will occur sometime next year.

Powell is expected to clarify the Fed’s near-term plans at the conclusion of the policy meeting on Wednesday.

Federal Reserve Gov. Randal Quarles told the Milken Institute Global Conference last month that weaker growth in payrolls in August and September, plus supply chain bottlenecks, won’t last forever.

“Supply constraints are particularly evident interest-sensitive parts of the economy, such as residential investment and vehicle sales, limiting the scope for additional monetary accommodation to stimulate activity in those sectors,” Quarles said in a statement.

“I expect that these developments, however, have for the most part simply postponed activity temporarily and that robust growth will return in the coming months.”

Reporting by Clyde Hughes

United Press International

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