The Federal Reserve began closing the door on its pandemic-driven monetary policy as officials projected an accelerated timetable for interest rate increases, opened talks on how to end crisis-era bond buying, and said the 15-month-old health emergency was no longer a core constraint on US commerce.
Signaling that broad changes in policy may happen sooner than expected, US central bank officials moved their first projected rate increases from 2024 into 2023, with 13 of 18 policymakers foreseeing a “liftoff” in borrowing costs that year and 11 seeing two quarter-percentage-point rate increases.
Seven of the officials see rates moving higher next year, opening the possibility of even more aggressive action.
Fed Chair Jerome Powell, who spoke to reporters after the release of the central bank’s latest policy statement and economic projections, said there had also been initial discussions about when to pull back on the Fed’s $120 billion in monthly bond purchases, a conversation that would be completed in coming months as the economy continues to heal.
All told, Powell’s comments and the new Fed policy statement marked a strong vote of confidence that the US recovery is on track, with even the pandemic - an ever-present fact of life that has conditioned monetary policy since March of 2020 - of diminishing concern.
Published in The Express Tribune, June 18h, 2021.