USA: The Fed signals a possible ‘tapering’ from mid-November – “minutes”, News markets

by Ann Saphir

WASHINGTON, Oct. 13 (Reuters) – U.S. Federal Reserve (Fed) officials have signaled they may start cutting back on support measures deployed by the central bank to offset the impact of the coronavirus health crisis , according to the minutes of their September monetary policy meeting.

However, they remain divided on the extent of the threat posed by inflation and on the most opportune moment to start raising interest rates in response, show the “minutes” of the Fed released Wednesday.

“No decision to move forward on asset purchase relief was taken during the meeting, but participants broadly agreed that, considering that the recovery of the economy remains broadly on track, a a gradual process of ‘tapering’ which would end around the middle of next year should be appropriate, “the record wrote.

Fed officials have discussed the possibility of slashing purchases of US Treasuries by $ 10 billion per month, the document shows, although “several” meeting attendees expressed their preference for a faster tightening of bonds. purchasing programs.

If the decision to start ‘tapering’ is taken at the monetary policy meeting scheduled for November 2-3, the process could be launched in mid-November or mid-December, the Fed’s minutes indicate.

In contrast to the minutes of central bank meetings held during the summer, it is no longer written that Federal Reserve officials “broadly” expect inflationary pressures to ease as temporary factors move forward. “dissipate”.

Instead, the September meeting report suggests growing concerns within the Fed’s ranks about inflation, with “most” officials seeing heightened risks while “some” worrying about inflation. ‘a strong impact on prices.

However, it added, “several other” officials attribute the current price hike to pressures from the bottlenecks linked to the coronavirus pandemic, which could thus subside.

The Fed announced on September 22, after a two-day Federal Open Market Committee (FOMC) meeting, that it could “soon” reduce its bond purchases in the markets. Its latest forecast shows it could start raising interest rates before the end of 2022.

The public interventions of its officials have since shown that they were divided on the consequences to be drawn from the acceleration in inflation observed in recent months.

Consumer prices in the United States rose 0.4% last month, bringing year-on-year inflation to 5.4%, according to figures released early Wednesday. Excluding energy and food, however, the increase fell to 0.2% month-on-month and 4.0% year-on-year.

The Fed has set itself a “flexible” inflation target of 2%. (Report Anne Saphir, Lindsay Dunsmuir and Jonnelle Marte; French version Marc Angrand and Jean Terzian)

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