The Federal Reserve intends to conclude a reduction in bond purchases in the middle of 2022


The US Federal Reserve Chairman, Jerome Powell, said yesterday that the US central bank may conclude reducing its bond purchases by the middle of next year, if the economy remains on track, and that it will begin easing stimulus measures at the next meeting.
Powell’s comments came at a press conference after the publication of the latest monetary policy statement from the US Federal Reserve, which said that “moderation in the pace of asset purchases may be justified soon”, but did not include any indication of the time period that might take that process.
The US Federal Reserve buys $120 billion a month in treasury bonds and mortgage-backed securities to support the recovery of the world’s largest economy from the Corona virus pandemic.
Powell indicated that the US Federal Reserve discussed an appropriate pace to ease the stimulus if the necessary conditions for doing so were achieved, pointing out that the delta mutator slowed the recovery of the economy, but the continued progress in vaccines would support a return to normal economic conditions.
He said: The growth is likely to continue at a strong pace until the end of the year, as the actions of the US Federal Reserve will ensure that monetary policy supports the economy until the recovery is complete, and the central bank is strongly committed to achieving its goals.
He stressed that it was “very important” that Congress raise the federal debt ceiling in a timely manner, and no one should assume that the central bank can fully protect the economy or financial markets if the United States defaults. Regarding inflation, he said: The US Federal Reserve will take measures if it remains higher than expected, adding that inflation is high and is likely to remain so for months, before proceeding at a moderate pace.
To assess the situation, over a two-and-a-half day period, officials at the US Federal Reserve examined progress in employment and inflation.
On the first front, the slowdown was observed in August after good progress in June and then in July, and only 235,000 jobs were created, three times less than expected, while the unemployment rate continued to decline to 5.2 percent.
Inflation, of course, showed signs of moderation, but it reached 4.2 per cent in a year in August, and remains well above the 2 per cent rate the Federal Reserve wants in the long run.
Several officials from the monetary institution warned in the past weeks that the price hike may remain in effect for a longer period than expected.
“Growth forecasts will be lowered this year, but inflation will be higher,” said Ian Shepherdson, an economist at Pantheon Economics.
The world’s leading economies are continuing to tighten monetary policy without a clear plan. The European Central Bank timidly launched the move and postponed the debate to December, while the Bank of England fears that its monetary tightening will stifle the economic recovery in its bud.
A new shadow hangs over the US economy, and thus the global economy, which is the US default.
The US debt ceiling has been in effect again since August 1, two years after the suspension, and if no agreement is reached in Congress to suspend it again or to raise the maximum allowed debt, the United States will not be able to borrow to finance itself.


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