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Fed could announce the reduction of its bond purchase plan tomorrow

The Federal Reserve (Fed) of the United States started its two-day meeting on Tuesday after which it is expected to announce the beginning of the reduction of its multimillion-dollar monthly bond purchase program amid the economic recovery and the persistent rise in prices .

The US central bank will report on its decision tomorrow Wednesday at 2:00 p.m. local time (18:00 GMT) with the publication of its statement on monetary policy, and then its president, Jerome Powell, will hold a press conference to give further explanations.

According to the minutes of its September meeting, the Fed would begin the gradual withdrawal of monetary stimulus “mid-November or December”By reducing the volume of its monthly bond purchase program worth US $ 120,000 million.

Specifically, the reduction would be US $ 15,000 million, which would leave the monthly purchases by the Fed in a monthly volume of US $ 105,000 million. The goal would be to completely end the bond purchase program by mid-2022.

The US central bank maintains interest rates in the range close to zero and the aforementioned liquidity injections since March 2020, to support the economy after the impact of the pandemic.

In recent weeks there seems to be a growing consensus within the Fed to initiate the withdrawal of the program after the progressive improvement in the US economy and the sustained rise in inflation.

The inflation rate closed October at 5.4%, which represents levels not seen in the United States in more than a decade.

A week ago, the secretary of the treasure, Janet Yellen, assured that she does not believe that he will go away “to lose control”Of inflation in the country, although he acknowledged that he expects prices to remain high until the middle of 2022.

In September, the Fed it lowered its economic growth forecasts to 5.9% this year, compared to the 7% estimated three months ago; while it slightly raised inflation rates from 3.4% to 4.2% by the end of 2021.

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