FED May Begin to Reduce Its Bond Purchases

The Fed may begin to reduce its bond purchases. Fed Chairman Jerome Powell said, "It may be appropriate to start reducing bond purchases this year."

In his speech at the Jackson Hole Economic Policy Symposium, US Federal Reserve Chairman Jerome Powell said, "It may be appropriate to start reducing bond purchases this year. The reduction in bond purchases is not a direct signal of the timing of an interest rate hike." Stating that the pace of recovery from the epidemic exceeded expectations, Jerome Powell said, "The recovery after the pandemic was not equal. The demand for durable goods, which increased above the supply, increased the inflation." Emphasizing that the delta variant poses a risk, but they are on their way to the target, Fed Chairman Powell said, "Price increases are concentrated on certain products. Price pressure will also decrease in durable consumer goods. If wage increases remain above productivity, price increases may occur." Fed Chairman Jerome Powell said: "We can see that inflation is temporary. If high inflation is a problem, the Fed will definitely react. Time will tell if we've reached the 2 percent inflation target. The changes we made last year helped us. Most members support reducing their asset purchases with a recovery."