Inflation dominated Fed’s last meeting
Policymakers want central bank to reduce bond buying
WASHINGTON >> Worries about inflation dominated the Federal Reserve’s November policy meeting, with some policymakers suggesting that the central bank should move more quickly to reduce its bondbuying program in order to give it flexibility to raise interest rates sooner if necessary, minutes from the meeting showed.
The Fed has been buying $120 billion in bonds each month and has kept interest rates near zero, policy moves that have helped make borrowing cheap and keep money flowing through the economy. This month, the Fed took the first step toward withdrawing support for the economy when it announced that it would begin scaling back its Treasury bond and mortgagebacked security purchases by $15 billion a month starting in November.
“Some participants suggested that reducing the pace of net asset purchases by more than $15 billion each month could be warranted so that the committee would be in a better position to make adjustments to the target range for the federal funds rate, particularly in light of inflation pressures,” the minutes showed, referring to the Federal Open Market Committee, which sets interest rates.
Those comments reflected uncertainty at the central bank over how long supply chain kinks and elevated prices might continue. Fed officials maintained their expectation that inflation would diminish “significantly during 2022,” but policymakers “indicated that their uncertainty regarding this assessment had increased.”
“Many participants pointed to considerations that might suggest that elevated inflation could prove more persistent,” officials said.
Inflation has picked up over the past year, posing a challenge for the Fed, which is responsible for maintaining stable prices, along with fostering maximum employment. Prices have continued to surge since the Fed’s last meeting, a trajectory that could push policymakers to reduce their economic support more quickly than previously expected.
Data released Wednesday showed that prices were rising at the fastest pace in three decades as consumers face higher gas and food costs. Prices climbed by 5%