MercoPress. South Atlantic News Agency

Fed could announce this week the assets purchase reduction calendar

Fed chief Jerome Powell will be meeting world central bankers at Jackson Hole, when a reduction in asset purchases could be anticipated

The United States Federal Reserve could begin withdrawing economic stimuli sometime in the next four months and advances of such a program could be anticipated this week at the Jackson Hole central bankers meeting 26/27 August.

According to the minutes' extracts from the Federal Open Market Committee meeting last 27/28 July and released earlier this week, the Fed board is divided as to when is the best moment for such a decision.

For most members if the US economy continues to evolve as anticipated, “ it could be appropriate to begin reducing the rhythm of purchases this year”, can be read in the minutes. However economic conditions in the US have worsened since, as the threat of the Delta variant is proving to be more dangerous than anticipated.

A calendar with the reduction in assets' purchases is much expected by markets, and it is believed that Fed chair Jerome Powell could address the issue during the central bankers meeting this coming week in Wyoming, or during the next FOMC round scheduled for 21/22 September.

Positions are divided in the Fed since some members favour a quick action fearful that inflation is accelerating and might continue to climb, while others are more cautious and wish to have more economic data referred to the Delta variant impact. Thus some members believe it more appropriate to reduce the purchase of assets during the first quarter of 2022 and not this year.

The Fed currently purchases some 80 billion dollars a month of Treasury bonds and 40 billion linked to mortgages to inject liquidity into the system. Under its mandate, the Federal Reserve has as its objectives achieving full employment and annual inflation in the range of 2%. Nevertheless, board members agree that reference interest rates should remain in the range o 0 to 0,25%.