US Fed hints reduction in bond purchases soon, split over interest rates hike in 2022

US Fed Reserve building

The US Federal Reserve said on Sept. 22, that it will likely to begin reducing its bond purchases soon, indicating that interest rate hikes could begin in 2022.

Following the monetary policy meeting, the Fed stated that if progress towards broad-based inflation and employment targets continues as expected, the Fed Open Market Committee (FOMC) members may decide an adjustment in the pace of asset purchases soon.

The Fed decided to fix the interest rate at a range between 0 and 0.25%, in addition to keeping the asset purchase program valued at $120 billion per month.

The Fed’s quarterly forecasts showed that its officials are “evenly divided” on whether it will be appropriate to start raising interest rates in 2022.

In June, forecasts showed that most of the Fed’s members did not expect any rise in interest rates until 2023.

Federal Reserve Chairman, Jerome Powell, is scheduled to hold a press conference later today, Sept. 23, in Washington to discuss the monetary policy outlook.