Wednesday's Federal Reserve held benchmark interest rates at zero, but it indicated that rate increases could be sooner than anticipated. It also significantly reduced its economic outlook for the year.
Officials from the Federal Open Market Committee, which is responsible for policymaking, indicated that they would begin to reduce the amount of stimulus the central bank provided during the financial crisis. However, there was no indication as to when this might occur.
"If progress continues broadly, the Committee considers that a moderated pace in asset purchases may soon become necessary," the FOMC's post meeting statement stated. Recent CNBC surveys revealed that respondents expected tapering to begin in December and to be announced by CNBC in November.
Jerome Powell, Fed Chairman, stated at his post-meeting press conference that the committee was ready to move.
He said that although no decision was made, most participants believed that a gradual tapering process that ends around the middle next year, as long as recovery is on track, was likely to be suitable.
The committee unanimously voted to keep short-term rates near zero for now.
Members now see the 2022 rate increase as more likely than ever. A slight majority of members saw that rate increase in 2023 when they last published their economic projections in June.
Powell stated that the Fed is closer to its goals of making "substantial further advances" in inflation and employment.
"For inflation we seem to have made significant progress. We appear to have made substantial further progress. He said that this part of the test was passed in his view as well as many others.
Powell stated, "My view is that the test for significant further progress in employment is almost met."
