The Federal Reserve’s policy committee began its two-day meeting on Tuesday, amid speculation that it could show signs of slowing down the purchase of large bonds in support of US economic recovery.
A year and a half after the central bank reduced its key interest rate to zero and began purchasing assets at a faster rate of investment in the financial markets, analysts carefully looked at any suggestions for when the Fed would begin to reverse those measures as business returns to normalcy. .
A Fed spokesman said the Federal Open Market Committee (FOMC) had begun its negotiations, but the latest speculation on economic progress would not be known until Wednesday, when FOMC would release its policy statement and Fed Chairman Jerome Powell spoke to reporters.
No inflation is expected, as the Fed has promised to keep the lending rate low for a long time to support the recovery.
But with data showing higher inflation than expected, the FOMC could provide the first indication that it is considering purchasing its monthly bond purchases, or it may not do so for a few months.
The Fed is currently buying at least $ 80 billion a month from Treasury debt and at least $ 40 billion in mortgage securities.
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Central bankers have admitted their surprise at the size of the inflation rate – which exceeds 5 percent in June at the same rate – but go on to say that the rate will drop once the temporary effects of reopening efforts are over.
The Fed has said it intends to allow inflation to exceed the 2 percent target for some time to allow the economy to return to full activity after the Covid-19 crash.
Powell “would also say” the level of sustainable development … is the way to go, “said Kathy Bostjancic of Oxford Economics.
But it will also show that “policymakers continue with their discussions about the timing, composition and size of those who will be …
Powell has promised to communicate openly before any policy changes, and analysts believe he can wait until the annual central bank conference in Jackson Hole, Wyoming scheduled for the end of August to make major announcements.
