U.S Fed to Double Monthly Asset Purchase Tapering to $30bn
The United States Federal Reserve said Wednesday it will double the pace of its wind-down of monthly asset purchases next month as it left its benchmark lending rate at near-zero where it has been since the COVID-19 pandemic slammed into the US economy 20 months ago.
The central bank’s Federal Open Market Committee said after its two-day meeting that it would cut $20 billion in monthly Treasury securities purchases and $10 billion in agency mortgage-backed securities.
The Fed had said the $120 billion in purchases would remain in place until employment and inflation levels were closer to its targets.
With inflation rising to levels not seen in decades, the panel last month cut its purchases by a combined $30 billion.
“The committee judges that similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook,” the FOMC said in a statement.
Meanwhile, the Fed lifted its projections for core inflation, expecting to finish this year at 5.3%, up sharply from 4.2% it expected in September.
Next year, inflation is expected to slow to 2.6%, but that was higher than the 2.2% seen three months ago.
Its projection for gross domestic product growth slipped to 5.5% from the 5.9% it anticipated three months ago. For next year, it expects a 4% gain, up from 3.8% earlier.
The employment rate is expected to finish the year at 4.3%, down from the Fed’s view in September of 4.8%. Next year, the rate is expected to reach 3.5%, below its earlier guidance of 3.8%. #U.S Fed to Double Monthly Asset Purchase Tapering to $60bn
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