Tapering could begin by the end of the year. The Chairman of the Federal Reserve, Jerome Powell, in his speech at the Jackson Hole symposium, did not disappoint analysts' expectations, providing some indications on the reduction in securities and mortgage purchases, now equal to 120 million dollars a month.
But no exact date. “We said we would continue asset purchases at the current pace until further substantial progress towards the goals of maximum employment and price stability. I believe that such progress has been achieved for inflation. There is also clear progress towards maximum employment. If the economy evolves as expected, it will be appropriate to start reduce the speed of asset purchases this yearPowell said, noting however that tapering “is not a direct signal from a neighbor increase in interest rates“. Any decision will be evaluated with extreme caution in the coming weeks, given that too early a departure could be "very harmful", underlined the president. Words that suggest a possible start in the month of November, as expected by many analysts, but the pressure from the hawks could affect the times, who instead would like to start with the reduction already after the meeting scheduled for 21-22 September.
Powell's words pushed up Wall Street and the European stock exchanges, while the euro-dollar exchange rate stands at 1,1801. The yield on the 1,334-year T-Bond is XNUMX%.
Speaking of inflation, the Fed chairman does not hide his "concern", but says he is optimistic, pointing out that the price hike is temporary and the value will return to its 2% target. The pandemic, on the other hand, remains "a threat to growth and the Delta variant creates short-term risks", but "the prospects are good for continued progress towards maximum employment". The central banker explained that the US economy has made "clear progress" but "weaknesses" remain in the labor market: in this context, an inopportune and untimely move in monetary policy could "slow down economic activity".
