Fed to discuss pace of tapering asset purchases today

The Federal Open Market Committee (FOMC) – the Fed’s monetary-policy setting arm – begins its final meeting of 2021 today and is expected to discuss several topics of interest to credit unions.

The most anticipated subject will be whether or not the FOMC will speed up the pace of tapering. The Fed will likely not raise rates until the tapering process is complete, which is scheduled to be finished in June. However, many expect a quicker pace to bring it to a close as early as March. The FOMC will also be providing projections to see if there’s a broad expectation for multiple rate hikes next year.

During the November meeting, FOMC predicted that November and December would see a 12.5 percent reduction in the pace of each type of asset purchase. At that pace, purchases will be wound down to zero by June 2022. NAFCU Chief Economist and Vice President of Research Curt Long last month commented on the previous FOMC meeting saying, “The $15 billion per month pace of tapering was also in line with expectations and puts the Federal Reserve on track to wind down the process by June 2022.”

The committee also announced that it would begin tapering asset purchases from $80 billion in treasuries to $40 billion in agency mortgage-backed securities. The Fed also maintained the federal funds target rate near its current range of 0 to 0.25 percent.


continue reading »