Fed could begin tapering bond purchases by November, meeting minutes show

The Fed needs to ‘get on with tapering’: Bob Doll

Crossmark Global Investments CIO Bob Doll expects the Fed to announce it will raise interest rates at the next formal meeting.

Most Federal Reserve officials agreed last month they could begin slowing their aggressive bond-buying program as soon as November, the first step that policymakers will take to dialing back pandemic-era support for the U.S. economy.

Minutes from the U.S. central bank's Sept. 21-22 meeting show that policymakers are prepared to start gradually dialing back the $120 billion in monthly bond buys, a policy known as "quantitative easing" that's designed to keep credit cheap, as soon as next month. 

"Around half of respondents … viewed December as the most likely timing of the first reduction in the net pace of purchases, although respondents also attached significant probability to the first reduction coming in November," the minutes, released Wednesday, said.  

Policymakers said they expect to conclude the tapering process by July of next year, about one or two months earlier than previously expected.

At the September policy-setting meeting, the Fed continued to hold interest rates at the rock bottom level where they have sat since March 2020, when COVID-19 forced an unprecedented shutdown of the nation's economy. It also committed to keep purchasing $120 billion in bonds each month, a policy known as "quantitative easing" that's designed to keep credit cheap. 

Officials have signaled that reducing bond purchases will be the first step the Fed takes in returning to a more normal policy setting.

For months, the U.S. central bank has been grappling with how to manage the exit from the ultra-easy monetary policies put in place in March 2020 without triggering a market sell-off. Even though inflation has been running well above the Fed's preferred target of 2%, there are still close to 8 million unemployed Americans.

This is a developing story. Please check back for updates.

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