Fed Reserve is thinking of enhancing the momentum for bond-buying tapering

The Federal Reserve Chair Jerome Powell stated on Tuesday that the central bank may end up stepping to remove its efforts in boosting the economy as it starts battling rising inflationary pressures. In his appearance before a committee, the Fed chair stated that reducing the momentum of purchasing monthly bonds may move much more rapidly than the USD 15 billion-a-month schedule which was announced this month. Powell stated that he is expecting the issues to be surfaced in the meeting to be held in December.

The economy has been very strong coupled with higher inflationary pressures, which makes it appropriate for considering a wrap-up of the taper of asset purchases, announced back in November meeting, which is intended sooner than few months. The initial tapering schedule had June in its plans tapering the bond purchases; if the committee ends up choosing acceleration, then that turn the tapering schedule much closer to that in the spring, providing the Fed much more freedom for raising the interest rates anytime thereafter.

The statements led to some nervousness in the market and stocks plummeted, while government bond yields registering a rise. The remarks fueled the worrisome environment across the market amid the growing concerns toward the new omicron strain, though early indications state the variant to be less effective than anticipated. The Federal Open Market Committee, which is responsible for setting monetary policies comprising the interest rates and the Fed’s efforts in boosting activity via bond purchases, stated the following its November meeting the momentum for bond purchases could receive a cut by USD 15 billion a month — USD 10 billion across Treasury’s and USD 5 billion for mortgage-backed securities.