Federal Reserve officials express intent to tackle inflation risks
WASHINGTON – Federal Reserve officials said in discussions earlier this month that the central bank “will not hesitate”?? To take appropriate measures to address inflationary pressures that posed risks to the economy.
In the minutes released Wednesday from the Fed’s November 2-3 meeting, Fed officials emphasized that the sharp rise in inflation this year was still likely to be temporary while acknowledging that the price hike was greater than expected.
The minutes covered a meeting in which the Federal Reserve voted to take the first step to undo the massive support it provided to an economy that was pushed into recession last year after widespread shutdowns to contain the COVID virus.
At its November meeting, the Fed approved cuts in the amount of Treasuries and mortgage-backed securities it was buying to pressure long-term interest rates.
The committee agreed to cut $15 billion in November and another $15 billion in December in its $120 billion monthly purchases of Treasury securities and mortgage-backed securities. These monthly cuts were expected to continue until the bond-buying program was terminated in the middle of next year.
Inflation in recent months has reached levels not seen in decades. Fed Chairman Jerome Powell and other Fed officials have argued that price pressures are likely to be temporary and dissipate once issues such as supply chain bottlenecks are resolved.
But the Fed minutes showed a growing concern that unwanted price pressures could linger for much longer, and the Fed should be prepared to move to reduce bond purchases more quickly or even start raising the Fed’s benchmark interest rate sooner to make sure No inflation. out of control.
Various participants indicated that the committee should be prepared to adjust the pace of asset purchases and raise the target range for the federal funds rate sooner than participants currently expect if inflation continues to rise above levels aligned with the committee’s goals. ? Minutes said.
The Federal Reserve was lowered to a record low of 0% to 0.25% in the spring of 2020 as the Fed focused its efforts on preventing the COVID recession from a deeper downturn.
The Fed will meet next December 14-15, and some private economists said the central bank may decide to send a stronger signal at that time about the Fed’s intentions to tackle the economy’s jump in inflation.