Federal Reserve officials signaled they would probably begin tapering their bond-buying program soon and revealed a growing inclination to start raising interest rates in 2022.
If progress toward the Fed's employment and inflation goals "continues broadly as expected, the committee judges that a moderation in the pace of asset purchases may soon be warranted," the U.S. central bank's policy-setting Federal Open Market Committee said Wednesday in a statement following a two-day meeting.
The Fed also published updated quarterly projections which showed officials are now evenly split on whether or not it will be appropriate to begin raising the federal funds rate as soon as next year, according to the median estimate of FOMC participants. In June, the median projection indicated no rate increases until 2023.
Fed Chair Jerome Powell will hold a virtual press conference at 2:30 p.m. in Washington to discuss the U.S. central bank's first steps toward withdrawing emergency pandemic support for the economy.
His performance will be parsed both by investors and the White House: The central bank chief's term expires in February and President Joe Biden is expected to decide this fall whether or not to renominate him to another four years in his post.
New Economic Projections
The FOMC decided to maintain the target range for its benchmark policy rate at zero to 0.25%, and continue purchases of Treasuries and mortgage-backed securities at a pace of $120 billion per month. The vote was unanimous.
