The Federal Reserve signaled on Wednesday it could start reducing its crisis-era support for the U.S. economy by the middle of next month, with a growing number of its policymakers worried that high inflation could persist longer than previously thought.
Though no decision on a "taper" of the U.S. central bank's $120 billion in monthly asset purchases was reached, "participants generally assessed that, provided that the economic recovery remained broadly on track, a gradual tapering process that concluded around the middle of next year would likely be appropriate," according to the minutes of that meeting.
If a decision to begin tapering takes place at the Fed's Nov. 2-3 policy meeting, the minutes said, the process could begin in either the middle of that month or mid-December. Still, "several other" policymakers attributed upward price pressures to pandemic-related supply bottlenecks that could be expected to abate.With the wind-down in asset purchases imminent, attention now shifts to the timing of future interest rate hikes.
But now, the opposite problem may be emerging, as pent-up consumer demand fuels spending in a reopening economy and businesses, hobbled by supply bottlenecks, struggle to keep up.
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