Fed officials talk about curtailing asset purchases

Some Fed officials believe that the U.S. Central Bank should chart a path to cut some of its reserves. A lot of financial support If the economic recovery accelerates further, the impact on the economy will be even greater.

According to the minutes of the Federal Open Market Committee meeting in late April, officials generally stated that the U.S. economy is “far away” from achieving the dual goals of full employment and price stability, and that a very loose monetary policy is still needed. But some people believe that the time for the Fed to change its position may be relatively short this year.

The minutes of the meeting said: “Many participants believe that if the economy continues to move rapidly towards the committee’s goals, it may be appropriate to start discussing plans to adjust the pace of asset purchases at some point in the upcoming meeting.”

The Federal Reserve, chaired by Chairman Jay Powell, currently buys $120 billion in U.S. Treasury bonds and agency mortgage-backed securities every month, and has vowed to continue this pace until it sees inflation and employment targets.” Substantial progress has been made”.

The minutes of the meeting highlighted the central bank’s commitment to handle any policy changes with care-a more cautious approach than the former Fed Chairman Ben Bernanke adopted in 2013. Bernanke’s discussions on the withdrawal of policy support triggered the so-called conical development Temper, which led to a sharp tantrum. Global financial conditions are tightening.

The minutes of the meeting said: “Many participants emphasized that it is important for the committee to clearly communicate its assessment of progress towards long-term goals before it is judged to be sufficient to ensure that the rate of asset purchases changes.” For the development of the economy and progress towards the goals of the committee.”

The sell-off of US government bonds resumed on Wednesday, thereby increasing yields. The yield on the benchmark 10-year U.S. Treasury note rose by 0.05 percentage points to 1.69%.

Short-term bonds also participated in the sell-off, with the yield on the two-year Treasury bond climbing 0.02 percentage points to 0.35%. The price of the five-year Treasury bond rose by about 0.05% to 0.86%.

Kathy Jones, Charles Schwab’s chief fixed-income strategist, said: “They don’t release these things without knowing it will have an impact.” “This is the first tip. But this will be a gradual process. All languages ​​are conditional. They leave themselves a lot of flexibility.”

The Federal Open Market Committee (FOMC) met in late April. Earlier, the employment report was relatively weak. Data showed that rising consumer prices have triggered concerns about labor mismatch and unemployment. Rising inflation rate, Complicating the prediction of the trajectory of the US recovery from the pandemic.

Most U.S. monetary policymakers maintain a relatively optimistic attitude towards inflation. The minutes of the meeting showed that “as the economy further opens up, the surge in demand” will make the consumer price inflation rate “slightly higher” 2%, but “after the temporary effects of these factors disappear, participants generally expect the inflation rate to ease. “.

“Looking forward, participants expect that the inflation rate will reach the level of achieving the committee’s goals over time.”