The veil is falling: it is becoming clear when and how the US Federal Reserve plans to retire

The veil is falling: it is becoming clear when and how the US Federal Reserve plans to retire

This week the Federal Reserve released the minutes of its September meeting, from which we learned more details about the current status of FOMC members. The September meeting It was one of the most important for several months, as it was at this meeting that the Fed announced that the asset purchase program launched in March 2020 would soon be phased out.

The minutes after the meeting and the subsequent press conference were particularly interesting. Although the Fed was expected to signal the end of the advance asset purchase program, it was not possible to know what it was going to say in advance, i.e. loose and tough language was on the set. The Federal Reserve met both expectations:

  • In the post-interest rate announcement, he said that if real economic conditions called for it, the central bank would begin phasing out its asset purchase program, but there was still a lot of uncertainty. Based on the loose message, the dollar started to weaken, and the stock markets strengthened.
  • Then Chairman Jerome Powell stood in front of the cameras half an hour later, saying that everything had been submitted to start the asset purchase program, and there was broad consensus within the FOMC that this should be disabled by the middle of next year. In the news, indices fell below their pre-decision level, and the dollar started to strengthen.

There was a sharp difference in wording between the pigeon-like announcement and the shell-like press conference, so it can be suspected that there was not complete coherence on this issue within the FOMC.

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