Fed officials are determined to tackle inflation risks

WASHINGTON — Federal Reserve officials said in talks earlier this month that the central bank “wouldn’t hesitate”?? take appropriate measures to address inflationary pressures that posed risks to the economy.

In minutes released Wednesday of the Fed’s Nov. 2-3 meeting, Fed officials claimed the rise in inflation seen this year was likely still transient, while acknowledging that the price hike was greater. than expected.

The minutes related to a meeting in which the Fed voted to take the first step to reverse the massive support it has given to an economy plunged into recession last year after widespread lockdowns to contain the COVID virus .

At its November meeting, the Fed approved cuts in the amount of government bonds and mortgage-backed securities it bought to put downward pressure on yields.

The committee approved a $15 billion cut in November and another $15 billion in December of the $120 billion in monthly purchases of government bonds and mortgage-backed securities it had made. These monthly cuts were expected to continue until the bond-buying program was phased out in mid-next year.

Inflation has reached levels not seen in decades in recent months. Fed Chair Jerome Powell and other Fed officials have argued that price pressures will likely be transient and subside once issues such as supply chain bottlenecks are resolved.

But the Fed’s minutes revealed a growing concern that the unwanted price pressures could last longer, and the Fed should be willing to cut bond purchases more quickly or even start raising the Fed’s benchmark interest rate earlier. ensure that inflation does not get out of hand.

Several participants noted that the committee should be willing to adjust the pace of asset purchases and raise the target range for the federal fund rate earlier than participants had currently anticipated if inflation were to remain above levels consistent with are with the objectives of the committee,”? ? the minutes said.

The Fed’s key rate was cut to a record low of 0% to 0.25% in the spring of 2020, as the Fed focused its efforts to prevent the COVID recession from turning into a deeper downturn.

The Fed is set to meet next December 14-15, and some private economists said the central bank may decide at that time to send a stronger signal about the Fed’s intentions to harness the economy’s inflation jump. to grab.

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