By Swann Collins, investor and consultant in global affairs – Contributor to Eurasia Business News, October 13, 2021

The Fed (US Central Bank) may start reducing its asset purchases as early as November, and end them in the middle of 2022, according to the minutes of the latest monetary policy meeting, released on Wednesday.

The minutes revealed participants generally agreed that a gradual tapering of asset purchases that concludes around the middle of next year would likely be appropriate if the economic recovery remained broadly on track.

“No decision to proceed with a moderation of asset purchase was made at that meeting,” the minutes said, “but participants generally assessed that provided the economic recovery remained broadly on track, a gradual tapering process that concluded around the middle of next year would likely be appropriate.”

U.S. inflation accelerated last month and rose by 5.4% from a year earlier, in unadjusted terms, its highest rate in over a decade, with price increases from pandemic-related labor and materials shortages rippling through the economy.

Since the start of the coronavirus crisis, the Fed has injected the markets with 120 billion US dollars in liquidity each month, through the purchase of 80 billion treasury bills and 40 billion MBS. This made it possible to fluidify credit and push rates down to help the economic recovery. Now that the American economic recovery is on track, the US Central bank intends to start putting away its anti-crisis tools, but its officials want, before launching the movement, to be certain that the recovery is lasting.

According to the OECD, the annual rate of consumer price inflation in the G20 economies is projected at around 4.5% in 2021.

Exchange rate as of October 13, 21:25 UTC : 1 USD = 0.86 EUR

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© Copyright 2021 – Swann Collins, investor and consultant in global affairs.