Fed ChairJerome Powell confirmed the central bank’s upcoming plan to start reversing its easy-money policies later this year while explaining the reasons for decline in inflation.
- At the Fed’s meeting late July, Mr. Powell stated that if the US economy evolved largely as anticipated, it could be appropriate to start reducing the pace of the Fed’s $120 billion in monthly asset purchases.
- Since July’s meeting, the economy has recorded “more progress in the form of a strong employment report for July, but also the further spread of the Delta variant” of the Covid-19.
- The US Federal Reserve cut its short-term benchmark interest rate to near zero when the covid-19 pandemic hit the U.S. economy, and it has been purchasing $120 billion monthly.
- The recent surge of Covid-19 infections due to the Delta variant has complicated the economic outlook by creating renewed risk of a sharper economic slowdown at the time the Fed was ready to taper.
Mr. Powell recommended inflation was likely to moderate in the coming months because prices of certain items, such used cars, that contributed to recent price surges have started to fall.
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Source: The Wall Street Journal.