Fed is discussing a faster way to hike rates

Federal Reserve in Washington

The central bank reserves the right to increase the rate of bond buybacks if necessary.

(Photo: dpa)

Washington At its latest monetary policy meeting, the US Federal Reserve discussed a faster way to raise interest rates. Several participants argued that the Fed should be prepared for a faster pace in reducing its bond purchases.

This increased pace could be appropriate in order to be able to initiate a rate hike earlier if necessary. As the minutes of the meeting published on Wednesday also showed, several monetary authorities called for flexibility as a guideline for monetary policy in an environment marked by uncertainty and increased inflation.

At the meeting on November 2nd and 3rd, the Federal Reserve finally agreed to throttle its securities purchases by $ 15 billion a month from mid-November. The total purchase volume of recently 120 billion dollars per month could thus be melted in the course of this so-called tapering by the middle of next year. This is a prerequisite for an interest rate hike. However, the central bank expressly reserved the right to increase or decrease the pace if necessary.

The outgoing Fed Vice President Richard Clarida has signaled that accelerated tapering could be discussed at the interest rate meeting in December given the increased risk of inflation. Fed Director Christopher Waller was even more specific and called for the pace of dismantling to be doubled. Then the Fed could have melted its bond purchases as early as April. This would pave the way for a rate hike in the second quarter. The Fed is currently keeping the key rate in a range of zero to 0.25 percent.

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The head of the Fed for the San Francisco district, Mary Daly, was also open to the idea of ​​accelerated tapering – especially against the background of the risk of inflation: The rate of price increases in the US has recently reached 6.2 in the wake of exploding energy costs and pandemic-related supply bottlenecks Percent has not been higher in three decades. At the same time, the job market is noticeably recovering from the Corona crisis.

More: Jerome Powell is allowed to remain Fed chief – markets breathe easy

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