Now that the Federal Reserve has announced the end of its pandemic-era stimulus program, the next question is how long it will take until the program is fully implemented.
That may happen sooner than most people expect.
“At the moment, the economy is very strong and inflationary pressures are high and so, in my view, looking at reducing our asset purchases … perhaps sooner. a few months,” Fed Chairman Jerome Powell testified before the Senate. Tuesday.
Earlier this month, the Fed announced it would slow its monthly purchases, cutting bond purchases by $10 billion for Treasury securities and by $5 billion for agency mortgage-backed securities.
At their December meeting, central banks will discuss whether this pace is still appropriate, Powell said.
He also added that by then, the bankers will be seeing another labor market report – scheduled for this Friday – and possibly knowing more about the new Omicron variant of the coronavirus.
It’s about learning about transmissibility, the ability of existing vaccines to work against it, and about the severity of illness if acquired, Powell said.
“Then and only then can we make an assessment of the impact on the economy,” he added.