FOMC to Accelerate Asset Purchase Tapering

The Federal Reserve will accelerate its planned tapering of Treasury securities and mortgage-backed securities purchases, according to the latest Federal Open Market Committee statement issued today. Fed Chairman Jerome Powell said the Fed will begin tapering asset purchases in January—a few months ahead of schedule—and that “increases in securities holdings would cease by March.”

Meanwhile, the committee said it would continue to hold the target range for the federal funds rate at its current level of 0 to 0.25%, though three rate increases are projected for 2022, and FOMC members project interest rates to reach 2.1% by 2024.

Powell emphasized that economic conditions are continuing to improve—though he cautioned that the path of the economy will continue to depend on the course of the coronavirus—and that the Fed is closely monitoring inflation and would be prepared to use its tools “to make sure inflation does not become entrenched.”