Fed to Start Withdrawing Economic Aid

The U.S. Federal Reserve will begin dialing down on economic aid as high inflation begins to persist.

Fed Chairman Jerome Powell announced on Nov. 3 after their latest policy meeting that the Fed will reduce its $120 billion monthly bond purchases by $15 billion starting this November.

Monthly Treasury security purchases will be reduced from $80 billion by $10 billion while $40 billion in mortgage bonds will be slashed by $5 billion.

As the U.S. economy recovers, the Fed’s increased purchases which were intended to stimulate growth during the pandemic have been pushing inflation upwards in the recent months. Global supply chain disruptions have also been adding weight to the prices of goods.

From June to September, inflation was at a 13-year high at 5.4 percent. Powell said that the Fed is targeting 2 percent, although in the longer run, but admitted that global supply chains can make the goal uncertain.

Investors have been anticipating the announcement since earlier this year as persistent inflation stirs fears of the Fed hiking up interest rates.

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