The Federal Open Market Committee (FOMC) announced this Wednesday that it leaves the benchmark interest rate, the target range for federal funds, unchanged in 0% -0.25%, as expected.
The Fed has also announced that it has decided reduce your bond purchase program by $ 15 billion per month.
Monetary policy statement
The Federal Reserve notes that high inflation is largely transitory.
“Supply and demand imbalances related to the pandemic have contributed to significant price increases in some sectors.”
“The adjustment of monetary policy cowill begin to reduce the monthly rate of its net asset purchases by the end of this month by 10 billion for Treasuries and 5 billion for mortgage-backed securities“.
“Beginning later this month, the Committee will increase its holdings of Treasury securities by at least $ 70 billion per month and of mortgage-backed securities by at least $ 35 billion per month. Beginning in December, the Committee will increase its holdings of Treasury securities by at least 60 billion per month and of mortgage-backed securities by at least 30 billion per month. The Committee considers that each month it is likely appropriate to reduce the pace of net purchases of similar assets , but is prepared to adjust the pace of purchases if changes in the economic outlook warrant. Ongoing purchases and holdings of securities by the Federal Reserve will continue to promote smooth market operations and accommodative financial conditions, supporting the flow of credit to households and companies “
“The economic activity and employment have continued to strengthen“.
“The increase in COVID-19 cases in the summer slowed the recovery of sectors negatively affected by the pandemic.”
“The path of the economy continues to depend on the course of the virus.”
In evaluating the appropriate monetary policy stance, the Committee will continue to monitor the implications of the incoming information for the economic outlook. The Committee would be willing to adjust the monetary policy stance as appropriate if risks arise that could impede the achievement of the Committee’s goals. The Committee’s evaluations will take into account a wide range of information, including readings on public health, labor market conditions, inflationary pressures and inflation expectations, and financial and international developments. “
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