In a virtual press conference Wednesday, Federal Reserve Chairman Jerome Powell discussed the central bank's plan to slow its economic stimulus and confirmed that members expect a tapering of pandemic-era bond-buying as soon as November and the process completed by the middle of 2022.
“Participants generally view, so long as the recovery remains on track, gradual tapering process that concludes around the middle of next year is likely to be appropriate,” he said.
Powell has sought to avoid another "taper tantrum." In 2013, the Fed curtailed its Great Recession-era bond-buying, which resulted in a bear market.
Reuters noted that that the Fed has been "buying $120 billion a month of Treasuries and mortgage-backed securities to support the economy's recovery from the coronavirus pandemic."
Fed officials indicated Wednesday that they may raise interest rates in 2022 as the economy recovers from the pandemic. There has been increased consumer spending in 2021, aided by government stimulus checks and other benefits.
The Fed suggested that it could hike rates six to seven times by the end of 2024, providing a bullish outlook for the economy.
Powell also stressed how failure to raise the debt ceiling could have serious consequences. "It's just very important that the debt ceiling be raised in a timely fashion so that the United States can pay its bills," he said.
The failure to raise the debt ceiling “is something that could result in... severe damage to the economy and to the financial markets,” Fed Chair Powell says. “No one should assume that the Fed or anyone else can [fully] protect the markets... in the event of a failure.” pic.twitter.com/9Cj9ordwo8
— Yahoo Finance (@YahooFinance)
Fed Reserve Powell on debt ceiling:
"It’s just very important the debt ceiling be raised in a timely fashion so the US can pay its bills when and if they come due. The failure to do that is something that could result in severe damage to the economy and to the financial markets"
— Heather Long (@byHeatherLong)
The Fed has upcoming meetings in early November and in mid-December.
