Dec 15, 2021, 02:15pm.
The Federal Reserve will move more quickly to phase out the emergency measures it put in place during the global financial crisis, it said as it concluded a two-day policy meeting Wednesday.
The Federal Reserve Chairman spoke during a Senate Banking Committee hearing.
The Associated Press.
The Federal Open Market Committee said in a Wednesday afternoon statement that it would keep the federal funds rate at between zero and 0.25%, but reduce its monthly bond purchases by an additional $30 billion each month.
The Fed Chair said that supply and demand imbalances have contributed to elevated levels of inflation but that progress on vaccinations should help reduce the surge by the end of the year.
The Fed expects three interest rate hikes next year, one more than was announced last month.
The S&P 500 rose after falling 2% from an all-time high last week.
The Fed decided at the last meeting to reduce the purchases by 15% each month until they are completely phased out by June.
The Fed had been buying Treasurys and mortgage-backed securities every month since June 2020 to help spur investment and the economy.
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After last month's inflation reading showed the largest surge in consumer prices in nearly four decades, stocks retreated from record highs. The central bank may have to speed up the pace of its bond-buying program in order to curb rising inflation, which could mean future interest rate hikes sooner than expected, according to a majority of central bank officials. Oanda senior market analyst Edward Moya says that the stock market has been under pressure as investors began to fear a trading life without a Fed safety net. A lot of central bank rate decisions this week will show that stocks will have to move higher without the help of central bankers.
The largest annual increase in consumer prices since June 1982 occurred in the 12 months ending in November.
The stock market dropped more than 300 points ahead of the Fed meeting.
Inflation hit a 40-year high in November.
