Members of the Federal Open Market Committee (FOMC) of the Fed at the US central bank monetary policy meeting, held September 21 and 22, indicated the possibility of a gradual removal of stimulus for the economy. called “tapering”, which involves buying out the debt – starting in mid-November or mid-December. The program is scheduled to be completed by the middle of next year.
The current incentive program involves the purchase of assets equivalent to $ 120 billion per month. These amounts are split each month into $ 80 billion in Treasury bonds and $ 40 billion in mortgage-backed securities.
According to the minutes of the last meeting, FOMC members generally agreed with the idea that they should begin to cut emergency support for the pandemic to the economy, with this “phase-out” starting in mid-November or mid-December, “even if the delta covid -19 continues to create obstacles. “
Fed members stressed that if at the next meeting on monetary policy, which will be held on November 2 and 3, a decision is made to start lifting the stimulus, the process could begin in mid-November or mid-December.
In addition, “participants [na reunião] they felt that, given that the economic recovery is still in the pipeline, it would be prudent to complete the ‘gradual transition’ process by the middle of next year, ” disclose the protocol released this Wednesday.
US central bank officials also discussed a possible quantitative “taper” trajectory, pointing to a $ 10 billion monthly decline in Treasury purchases and $ 5 billion in the case of mortgage-backed securities.
Inflation: continues to rise but is temporary
As for inflation, which is growing at a fast pace – in September it was at its highest level in 13 years, at 5.4% – some Fed officials noted that disruptions in supply chains and production could put pressure on prices. longer than expected. However, they confirmed its temporary nature.
Last month, Fed officials calculated that inflationary pressures will ease next year and inflation will fall to levels close to the central bank’s 2% target.
As for the federal funds rate, 9 out of 18 FOMC members predicted at the September meeting that key interest rates could rise at least once in 2022 (compared to the family who saw such an opportunity at the June meeting).
In September, the FOMC maintained interest rates between 0% and 0.25%, indicating that they will remain at this level until the labor market reaches full employment and inflation becomes more controllable (maybe “for some time.” , be above 2%.).
At this last Fed meeting, a “dot plot” – a map that shows how each central banker assesses changes in key interest rates – thus showed that half of the members of the Federal Reserve now expect interest rates to rise next year.
In addition, all but one participant expect at least one key rate hike by the end of 2023, with 13 of them expecting two hikes during 2022.
