Powell: Guidance Around Fed Tapering Could Come at Next Meeting
Substantial further progress toward maximum employment “all but met,” Fed chair says.
If recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate, Powell says
The Fed still evaluating whether to issue a CBDC amid extensive private innovation, which the Fed chair noted is taking place outside the regulatory perimeter.
The Federal Open Market Committee(FOMC) has kept interest rates consistently low and also maintained it’s asset purchases. Chair Jerome Powell said talks around tapering “could come as soon as the next meeting.”
The committee has not altered it’s tapering plan since last December, where the FOMC disclosed they would increase their Treasury security holdings from $80 billion to $160 Billion and of agency mortage-backed securities by at least $40 billion per month until substantial further progress has been made toward economic recovery.
“For inflation, we appear to have achieved more than substantial further progress, so that part of the test is achieved in my view and in the view of many others,” Powell said Wednesday during a press conference following the FOMC meeting. “The question is really on the maximum employment test.”
The chairman also indicated how the Delta variant has slowed the process for the economy getting back to full strength. Powell admitted anticipating more parents getting back to work as unemployment benefits have faded and school is back.
“The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal in the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test,” the Fed chair noted.