Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Fed Readies Bond Taper, but Emphasizes Measured Approach to Tightening

EconomySep 23, 2021 02:16
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Yasin Ebrahim

Investing.com - The Federal Reserve kept interest rates unchanged Wednesday, and signaled it would trim its monthly bond-buying program before year-end.

The Federal Open Market Committee left its benchmark rate unchanged in the range of 0% to 0.25%.

The committee indicated, however, it would begin cutting its $120 billion monthly bond purchases this year.

The Fed has been laying out the carpet for a tapering announcement for months, after acknowledging the recent economic progress toward its taper threshold of “substantial further progress.” 

Fed Chair Jerome Powell said last month the pace of the recovery “has exceeded expectations,” and stressed that there was still a way to go to restore the job market to pre-pandemic levels.

The August jobs report, however, fell well below economists’ forecast, as the impact of the delta variant and hurricane Ida disrupted hiring activity amid an ongoing labor market shortage. 

Market participants, however, see the effect of the Delta variant and the hurricane as too short term to filter into the Fed’s thinking on monetary policy.

“The impacts of the delta variant and the hurricane impact, however, are too short term, Darren Schuringa, CEO of ASYMMetrics ETFs said Tuesday in an interview with Investing.com.

The “Fed will be looking at the overall health and labor market and there’s still about 7 million jobs that we haven't recreated since the pandemic that need to come back online,” Schuringa added.

Powell has previously suggested the labor shortage has been driven by temporary factors, which will ultimately subside, driving up job gains heading into the fall.

As the Fed’s bond tapering program looks set to get underway, many analysts have expressed concerns about how soon after the completion of the taper, the central bank will move to lift interest rates.

Traders are expected to shift attention to Powell's press conference at 2.30 PM ET (1830GMT) for more clues on the Fed’s tapering plans and outlook on the economy.

“Look for Powell to pivot away from improvements in employment, which could remain weak due to the Delta variant and Hurricane Ida damages, to improvements we have already seen in financial conditions and a decision to taper asset purchases,” said Diane Swonk, the chief economist at Grant Thornton, in a note.

Fed Readies Bond Taper, but Emphasizes Measured Approach to Tightening
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email