US FED

BY A STAFF REPORTER 

Tapering of bond purchases will start “later this month,” the policymaking Federal Open Market Committee said in its post-meeting statement. The process will see reductions of $15 billion each month -- $10 billion in Treasury and $5 billion in mortgage-backed securities – from the current $120 billion a month that the Fed is buying.

The statement, approved unanimously, stressed that the Fed is not on a preset course and will make adjustments to the process if necessary.

The move was in line with market expectations following a series of Fed signals that it would begin winding down a program that accelerated in March 2020 as a response to the Covid pandemic.

The statement also noted that the economy is expected to continue improving, particularly after the supply chain issues are resolved.

The FOMC voted not to raise interest rates from their anchor near zero, a move also expected by the market.

The tie between interest rates and tapering is a vital one, and the statement stressed that investors should not view the reduction in purchases as a signal that rate hikes are imminent.

Overall dovish statements. Global markets have reacted positively so far.

Source : Eureka

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