Fed takes steps to reduce massive COVID help

SOT - FEDERAL RESERVE CHAIRMAN JEROME POWELL

"Today, the FOMC kept interest rates near zero. And in light of the progress the economy has made toward our goals, decided to begin reducing the pace of asset purchases."

The Federal Reserve took the first steps Wednesday toward reducing the massive help it's been providing the economy ever since the health crisis knocked millions of Americans out of work last year.

Fed Chief Jerome Powell announced the Fed will reduce its $120 billion monthly bond-buying program by $15 billion each month - beginning sometime in November...but left the door open to speed that up if inflation continues to run hot.

The central bank took notice of the biggest price surge in decades and the impact that's having on everyday Americans.

"We understand the difficulties that high inflation poses for individuals and families, particularly those with limited means to absorb higher prices for essentials such as food and transportation. Our tools cannot ease supply constraints. Like most forecasters, we continue to believe that our dynamic economy will adjust to the supply and demand imbalances and that, as it does, inflation will decline to levels much closer to our two percent longer-run goal. Of course, it is very difficult to predict the persistence of supply constraints or their effects on inflation. Global supply chains are complex. They will return to normal function. But the timing of that is highly uncertain."

Central banks, like the Fed, usually boost interest rates in order to get inflation under control…

But even though pocketbooks are getting hit hard right now, Powell is betting inflation will start to cool sometime next spring or summer - and thus a rate hike now would be premature.

"We don't think it's time yet to raise interest rates. There is still ground to cover to reach maximum employment, both in terms of employment and in terms of participation."

Wall Street appeared to buy the Fed's game plan for now -with stocks rising to fresh record highs.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting