In light of elevated inflation pressures and further improvements in the labor market, Federal Open Market Committee members decided in December to further reduce the monthly pace of the Federal Reserve’s net asset purchases. In minutes from the group’s Dec. 14-15 meeting released today, members remarked that that a quicker conclusion of net asset purchases would better position the committee “to set policy to address the full range of plausible economic outcomes.”
Committee members noted that inflation readings had been higher, more persistent and more widespread than previously expected, but said they anticipate that inflation will decline “significantly” as supply constraints ease in 2022.
Members also acknowledged that the path of the economy continues to depend on the course of the virus, adding that progress on vaccinations and an easing of supply constraints were expected to support continued gains in economic activity and employment as well as a reduction in inflation.
