United States Federal Reserve to conduct policy meeting

Photo: Kevin Lamarque/Reuters

US Federal Reserve Chairman Jerome Powell will today preside over the Fed’s 2-day September Federal Open Markets Committee (FOMC) meeting.

Officials will consider whether the Fed will continue to buy bonds at the current rate of $120 billion per month and keep interest rates steady at 0.25%, or to taper the purchases of those bonds and increase interest rates. Both the expansion of bond buying and decreased interest rates were  used by the Fed to provide liquidity and strength for a market otherwise weakened by the COVID-19 pandemic. Changes in either metric will indicate the Fed’s perspective on the health of the economy.

The Fed is not expected to issue guidance on tapering down bond purchases, nor to adjust interest rates until later in November. Rather than indicate significant changes to come, Powell will maintain the status quo and focus on addressing upcoming debt ceiling negotiations, as well as proposed taxes and new spending from the Biden administration. The Fed will issue guidance on interest rates and bond purchases if “substantial further progress” on inflation and jobs is made, that is, lowering inflation from 4% to the 2% target, and unemployment from 5.4% to a pre-pandemic 3.5%.

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