US: ‘Window’ by R. Clarida of the Fed to speed up tapering

The possibility of the Federal Reserve already considering at its next meeting in December the increase in the rate of decline in asset markets that began earlier this month was mentioned by Fed Vice President Richard Clarida, in a speech to the Economic Policy Conference for Asia in 2021, organized by the US Federal Reserve in San Francisco.

“I will carefully consider the data we are receiving from now until the December meeting, and it may be appropriate at that meeting to discuss increasing the rate at which we are reducing our balance sheets,” the Fed vice president said.

Earlier in November, the Fed began cutting $ 120 billion in monthly asset purchases as part of an emergency plan it launched last spring to support the US economy amid a pandemic rate of $ 15 billion a month. by 10 billion in the monthly bond purchases of 80 billion and by 5 billion in the purchases of mortgages ($ 40 billion), with the aim of ending the extraordinary program in the middle of 2022.

According to today’s statements by Clarida, however, the Fed is ready, if economic conditions justify it, to adjust the pace of tapering.

“This will be something that needs to be addressed at the next meeting,” Clarida said, noting that there was an upside risk to already high inflation, adding that the US economy was “in a very strong position”.

Earlier on Friday, Fed Governor Christopher Waller also stressed that the Fed needs to accelerate the decline in bond markets in order to raise interest rates, from the current 0% -0.25% range, already from the second quarter of next year, if high inflation and employment growth in the US, the two conditions set by the Federal Reserve, continue.