Jakarta, CNBC Indonesia – The US central bank is likely to start pulling some loose money policies before the end of the year. This was said directly by the Chairman of the United States Central Bank or The Federal Reserve (Fed), Jerome Powell, who added that there was an increase in interest rates.
The speech took place at the Jackson Hole Wyoming symposium. According to him, the economy is no longer at the point of needing a lot of policy support, quoted by CNBC International, Sunday (29/8/2021).
This means that there is a possibility that the Fed will start cutting the number of bond purchases given each month before the end of the year. This is done as long as economic progress continues.
The tapering is likely to be announced soon after the Fed’s Sept. 21-22 meeting, central bank officials said.
Powell said the timing and steps of reducing future asset purchases were not meant to signal the timing of a rate hike. “Where we have articulated a different and substantially more stringent test,” he said.
Meanwhile, strong inflation temporarily strengthened around the Fed’s 2% target. “We have many foundations to achieve maximum work,” he said.
Powell’s remarks were greeted positively by the market. The major stock indexes also rose to highs while government bond yields moved lower.
Fed vice chairman Richard Clarida agrees with Powell. He added that he hopes the reduction can occur within this year in line with the rate of increase in employment that continues to accelerate.
“I think if that happens then I will support starting our buying pace at the end of the year,” he said.
In addition, Powell also explained his opinion about the current increase in inflation. Later there will be a decrease to the target level.
(hps / hps)
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