The US Federal Reserve today (Wednesday) announced an acceleration in the pace of declining bond purchases. US interest rates, meanwhile, remain unchanged at zero.
In the wake of the Corona crisis, the Fed, led by Jerome Powell, has pursued a policy of expanding liquidity in the US financial system through bond purchases totaling about $ 120 billion a month. a month.
The Fed is now announcing that it will reduce bond purchases at a rate of $ 30 billion a month, so that the purchases will be completed already during the first quarter of 2022. In addition, Fed heads now expect 3 interest rate hikes in 2022, compared to the previous expectation of one interest rate hike. only.
Following the Fed announcement, a mixed trend was recorded on Wall Street. The dollar strengthened slightly against the euro and the pound sterling.
To date, there have been disagreements among bank executives regarding raising interest rates as early as 2022, and whether this is indeed the right move in the face of the slowdown in the US economy, between waves of the corona. Now, the consumer price index has indicated a 6.8% rise in the last 12 months to November, and a further rise is likely to be recorded in December as well.
Against the background of the jump in the inflation rate, Fed Chairman Powell admitted that this was probably not a temporary change and hinted recently that the Fed is expected to change its policy.