WASHINGTON–Minutes released from the Federal Open Markets Committee’s most recent meeting show the central bank is seeking to find a middle ground between tapering bond purchases while providing assistance to an economy still seeking to recover from the coronavirus lockdowns.
“Looking ahead, most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year,” the minutes state.
The Fed has been buying approximately $120 billion in asset purchases per month. It left rates unchanged when it adjourned the meeting.
Some Disagreement
Not all of the FOMC members were in complete agreement, the minutes indicate.
“Several others indicated, however, that a reduction in the pace of asset purchases was more likely to become appropriate early next year,” the Federal Reserve said.
Those FOMC members indicated that while employment has improved and inflation remains high, the labor market needs more help, and therefore more bond purchases, to fully recover.
The economy continues to dictate the pace at which such tapering will occur. In July, the country’s employers added almost 950,000 workers, helping to drive the unemployment rate down to 5.4%.
The Inflation Challenge
Meanwhile, inflation remains a challenge, with the country reporting a 5.4% year-over-year gain. Core inflation, however, was more muted.
The minutes also indicate some of the FOMC members highlighted “the risks that rising Covid-19 cases associated with the spread of the Delta variant could cause delays in returning to work and school and so damp (sic) the economic recovery.”
“Looking ahead, most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year,” the minutes state.
The Fed has been buying approximately $120 billion in asset purchases per month. It left rates unchanged when it adjourned the meeting.
Some Disagreement
Not all of the FOMC members were in complete agreement, the minutes indicate.
“Several others indicated, however, that a reduction in the pace of asset purchases was more likely to become appropriate early next year,” the Federal Reserve said.
Those FOMC members indicated that while employment has improved and inflation remains high, the labor market needs more help, and therefore more bond purchases, to fully recover.
The economy continues to dictate the pace at which such tapering will occur. In July, the country’s employers added almost 950,000 workers, helping to drive the unemployment rate down to 5.4%.
The Inflation Challenge
Meanwhile, inflation remains a challenge, with the country reporting a 5.4% year-over-year gain. Core inflation, however, was more muted.
The minutes also indicate some of the FOMC members highlighted “the risks that rising Covid-19 cases associated with the spread of the Delta variant could cause delays in returning to work and school and so damp (sic) the economic recovery.”
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