Fed Officials Indicate Possible Tapering This Year

Source: Federal Reserve

Officials of the Federal Open Market Committee have judged that the current conditions could warrant the reduction of the Federal Reserve’s bond-buying program. VFH is down 0.82% premarket.

• Minutes of the July meeting indicated that most officials were of the view that asset purchases could be tapered down as early as this year.
• Officials defended the tapering as they saw that conditions have satisfied “substantial further progress.”
• Several officials were open to a reduction in the coming months, given the economic and financial conditions.
• Others said this would be more appropriate in early 2022 as employment figures were not yet close to meeting substantial progress.
• The majority of the officials said reducing purchases of Treasury securities and mortgage-backed securities proportionally and having them end at the same time would be beneficial.
• A number of participants saw advantages in cutting back purchases before the forward guidance on policy rates was met.
• Officials noted, however, that the two were distinct and the timing of the actions was dependent on economic conditions.
• The committee during the meeting voted to keep short-term interest rates unchanged.