Fed weighing additional bond purchases to help boost economy
At their meeting earlier this month, Federal Reserve officials discussed possible future adjustments to the central bank’s monthly bond purchases to boost the economy.
On Wednesday, the Fed released minutes of its Nov. 4- 5 meeting, revealing that while officials believed that no changes were needed to the bond purchase program at that time, they “recognized that circumstances could shift to warrant such adjustments.”
The Fed has been buying $120 billion in bonds each month since June to keep downward pressure on long-term interest rates as a way of giving the economy a boost as it struggles to emerge from a deep recession.
The purchases have included $80 billion a month in Treasury bonds and $40 billion in mortgagebacked securities.
With the economy showing signs of slowing in the face of a resurgence in coronavirus cases and a return to shutdowns in some areas, there has been market speculation that the Fed could decide to boost the size of its monthly purchases.
The minutes show that while no decision was taken on what to do or when, Fed officials were keeping their options open.
Some analysts believe that the Fed will make an announcement on boosting the bond purchase program at its Dec. 15-16 meeting, especially if there has been no movement by Congress to provide more economic relief to individuals and businesses.