Fed Plans to Slow Economic Aid Amid Inflation Concerns

Supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to sizeable price increases in some sectors. In particular, bottlenecks and supply chains disruptions are limiting how quickly production can respond to the rebound in demand in the near term. As a result, overall inflation is running well above our 2 percent longer-run goal. Beginning later this month, we will reduce the monthly pace of our net asset purchases by $10 billion for Treasury securities and $5 billion for agency mortgage-backed securities. We also announced another reduction of this size in the monthly purchase pace starting in mid-December. If the economy evolves broadly, as expected, we judge that similar reductions in the pace of net asset purchases will likely be appropriate each month, implying that increases in our securities holdings would cease by the middle of next year. That said, we are prepared to adjust the pace of purchases, if warranted by changes in the economic outlook.