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The Federal Reserve ended its two-day monetary policy meeting on Wednesday by announcing its $ 120 billion bond purchase program.

Important facts

The Federal Reserve left interest rates unchanged and said it would scale back its bond-buying stimulus later this month and end it by June 2022 “given the progress the economy has made”.

The decision is the Fed’s first step in reducing the historic level of support it has given markets and the US economy since the Covid-19 pandemic.

The central bank announced that it would cut its bond purchases by $ 15 billion each month – of which $ 10 billion in government bonds and $ 5 billion in mortgage-backed securities – but it is also ready to adapt the buying pace to any changes in the economy Adjust location outlook.

Fed officials said in a statement that they still expect inflation, hovering near the 30-year high, to be “temporary” – with the central bank making it clear that the pressure is “expected” to be temporary.

“Supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to significant price increases in some sectors,” the central bank admitted in its statement.

Economic growth slowed in the third quarter due to supply chain constraints and inflation, which Fed chair Jerome Powell expected to continue through mid-2022.