The Federal Reserve stated on Wednesday that it will commence reducing the rate of its monthly bond purchases.
Source: Federal Reserve.
DXY up +0.41%, EUR USD down -0.54%
Tapering of bond purchases will begin “later this month,” according to a statement by the Federal Open Market Committee. The process will reduce $15 billion every month from the current $120 billion a month.
The committee stated that the move came “in light of the substantial further progress the economy has made toward the Committee’ goals since December 2020.”
The Committee judges that a similar move to reduce the rate of net asset purchases is likely to be appropriate every month, but it is ready to change the pace of purchases if the economic outlook demands.
The move was in line with market estimates after a series of Fed signals that would start winding down a program that accelerated in March 2020 to respond to the Covid pandemic.
Markets responded positively, with stocks turning positive and government bond yields edging upwards.