Federal Reserve officials signaled that the pace of the U.S. economic recovery from the pandemic is bringing forward their expectations for how quickly they will reduce policy support.
Chairman Jerome Powell told a press conference Wednesday that officials had begun a discussion about scaling back bond purchases after releasing forecasts that show they anticipate two interest rate increases by the end of 2023, projecting a faster-than-anticipated pace of tightening.
“The economy has clearly made progress,” Mr. Powell said, noting that policymakers had debated how far the economy has traveled toward their threshold for scaling back $120 billion in monthly bond purchases.
“While reaching the standard substantial further progress is still a ways off, participants expect that progress will continue,” he said. “You can think of this meeting as the talking-about-talking-about meeting, if you like,” he added following a two-day gathering of the Federal Open Market Committee.
The central bank held the target range for its benchmark policy rate unchanged at zero to 0.25% — where it’s been since March 2020. The FOMC vote was unanimous.
The dollar rose, stocks declined and yields on 10-year Treasuries jumped following the news.