–
The Federal Reserve is starting a gradual cut in its bond purchases as the US economy has recovered sufficiently from the pandemic.
–
The US central bank (Fed) is taking an important step towards normalizing its monetary policy. On Wednesday, it decided to cut its bond purchases by $15 billion a month from November. Because those purchases now amount to $120 billion a month, the stimulus will in principle be stopped in June next year.
–
Substantial further progress has been made towards the dual goal of maximum employment and an average inflation rate of 2 percent, the Fed said in a statement accompanying its decision. The unemployment rate has fallen to 4.8 percent since its peak of 14.8 percent in April last year.
–
Inflation has risen well above target. But the central bank continues to believe that the high inflation is temporary, although it has become more cautious. She refers to ‘factors that are expected to be temporary’. After the last meeting, the Fed talked about ‘temporary factors’.
–
The decision to reduce the stimulus to the economy has been unanimously approved by the 11 voting directors.
–
–
