MILANO – The Federal Reserve, the American Central Bank, announced the start of the tapering, or the gradual reduction of the $ 120 billion a month bond purchase program launched to support the US economy during the crisis caused by the coronavirus pandemic.
The Central Bank of Washington has decided that it will reduce purchases by 15 billion per month starting in November: in this way, the tapering will end in June. At the meeting on 21-22 September, the bankers agreed on the possibility of starting tapering in mid-November or mid-December.
On the speed of the tap-squeeze, the Fed said it was ready to “fix” the process of reducing asset purchases: during this month the Fed will buy at least 70 billion Treasuries and 35 billion mortgage-backed securities, down from to the 120 billion dollars of purchases in October. “In December, the Fed will buy 60 billion in Treasuries and 30 billion in mortage-baked security,” reads the note released by the Fed at the end of the two-day meeting.
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The news, which in itself is a turning point, however, does not represent an unexpected novelty. No surprise from the meeting of the Monetary Policy Committee also for the decision of keep rates steady in the range between 0 and 0.25%. Moves, together with tapering, were taken “in light of substantial further progress made by the US economy” towards the goals set by the central bank.
Important is the reference to the bugbear of recent months, the price rush, which with the rush of raw materials and global supply problems jeopardize the recovery. For the Fed “inflation is high but largely reflects transitory factors“. According to the US central bank, the imbalances between supply and demand caused by the pandemic have contributed to the significant increases in prices in various sectors. It cannot be forgotten, then, that the path of the economy” depends on Covid “.
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