Powell to Discuss Increasing Bond Purchase Taper at December Fed Meeting
Federal Reserve Chairman Jerome Powell has stated during a Senate committee meeting today that he expects policymakers in December to discuss speeding up the process of tapering of monthly bond purchases that have made up the “quantitive easing” monetary policy put into place since March 2020.
Powell stated that he thinks the reduction pace can increase from the $15 billion USD a month schedule that was announced in early November 2021. “At this point, the economy is very strong and inflationary pressures are higher, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we actually announced at the November meeting, perhaps a few months sooner. I expect that we will discuss that at our upcoming meeting,” he said.
The initial tapering schedule would see bond purchases end around June. If the schedule is expedited, then the program would end sooner possibly in the spring. As a result, the Fed would be able to increase federal interest rates sooner.
While Powell did not indicate by how much the taper would accelerate nor that the tapering should be as an indication that interest rate increases are coming soon, U.S. financial markets were quick to react where the S&P fell over 1.5% lower from its open.
