September 21, 2021

Fed expected to reveal more about eventual plan to taper assets

Federal ReserveThe Federal Open Market Committee (FOMC) – the Fed's monetary-policy setting arm - begins its September meeting today and is expected to hold the federal funds target rate range at its current 0 percent to 0.25 percent for the foreseeable future. The rate has remained at its current level since March 2020. 

Federal Reserve Chairman Jerome Powell has previously outlined three standards that must be met before the FOMC will consider raising rates: 

  • inflation has reached 2 percent and stayed at that level for some time; 
  • longer term inflation expectations remain well anchored at 2 percent; and 
  • the labor market has sufficiently recovered. 

Regarding when the Fed will begin to taper asset purchases, minutes from the committee's last meeting, revealed that despite strong indicators of economic activity and employment, a vast majority of participants judged that the Committee’s standard of “substantial further progress” toward the maximum-employment goal set out by the committee had not been met. 

Additionally, while in discussion of current conditions, most participants noted that with progress on vaccinations and strong policy support, indicators of economic activity and employment had continued to strengthen.

The FOMC's two-day meeting will conclude tomorrow; the committee is expected to next meet Nov. 2-3. 

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