The Federal Reserve officials plan to hold deliberations at the upcoming meeting on how to scale back their easy-money policies as the US economy continues to recover than anticipated six months ago.
- The Fed said they are unlikely to raise interest rates from near zero until they are gradually reducing the asset purchases.
- Some Central Bank officials have considered concluding the purchases around October 2022 to allow for lifting rates later in the year if the recovery is stronger than projected now.
- The US central bank started purchasing large quantities of the securities in March 2020 when the pandemic led to near-meltdown in financial markets.
- The timing of tapering plans of the Fed will depend on whether the economy keeps performing as expected and whether the Fed Chair can build consensus among policymakers.
The Fed’s preferred inflation gauge increased by 3.4% in May, a larger increase than expected and over the target of 2% on average. Mr. Powell faces division among the Fed officials over the economic outlook and the proper policy response.
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Source: The Wall Street Journal.