The Oklahoman

Bond buying could end in 2022

A ‘gradual tapering process’ discussed

- Christophe­r Rugaber

WASHINGTON – Federal Reserve officials agreed at their last meeting that if the economy continued to improve, they could start reducing their monthly bond purchases as soon as next month and bring them to an end by the middle of 2022.

The discussion was revealed in the minutes of the Fed’s Sept. 21-22 meeting, released Wednesday.

Fed officials also said that the taper itself could begin in the middle of November or December.

“Participan­ts generally assessed that, provided that the economic recovery remained broadly on track, a

gradual tapering process that concluded around the middle of next year would likely be appropriat­e,” the minutes said.

Last December, the Fed said that it would buy $120 billion a month in bonds until the economy had made “substantia­l progress” toward its goals of maximum employment and inflation that averages 2% over time.

The bond purchases are intended to spur more borrowing and spending by keeping longer-term interest rates low. The Fed has also pegged its short-term benchmark rate at nearly zero.

At a news conference following the September meeting, Fed Chair Jerome Powell said that such progress had been made with inflation and the test was “all but met” when it came to employment.

“If the economy continues to progress broadly in line with expectatio­ns,” Powell said, “I think we can easily move ahead at the next meeting,” which will be held Nov. 2-3, when the reduction, or tapering, could be announced.

Earlier Wednesday, the government said consumer prices rose 5.4% in September compared with a year ago, matching a 13-year high that was also reached in June and July. The ongoing price gains have raised pressure on the Fed to dial-back its low-interest rate policies.

Hiring has also slowed sharply in the past two months, with the government reporting Friday that just 194,000 jobs were added in September, far below the roughly 1 million gained in both June and July.

Still, Powell said at the September news conference that he wouldn’t need to see a “super great” jobs report that month to support tapering at the November meeting. He said that the cumulative progress that has been made – with more than 17 million of the 22 million jobs lost to the pandemic having been recovered – would likely be enough.

According to the minutes, Fed policymake­rs said that the surging COVID-19 cases around the world “were exacerbati­ng or prolonging” the supply chain bottleneck­s that have forced many auto plants to shut down and pushed up prices for furniture, television­s, shoes and other imported goods.

Several policymake­rs, which include the presidents of the Fed’s 12 regional banks, said businesses in their districts “generally did not expect these bottleneck­s to be fully resolved until sometime next year or even later.”

 ?? AL DRAGO/AP ?? Fed Chair Jerome Powell said the test was “all but met” when it came to employment.
AL DRAGO/AP Fed Chair Jerome Powell said the test was “all but met” when it came to employment.

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