Federal Reserve officials are expected to slow the asset purchases used to support the US economy during the COVID pandemic. Officials also indicated that they might raise interest rates in 2022. Both of these can be signs that policymakers are preparing to move away from assistance as the business landscape continues to recover from pandemic setbacks.

Fed officials have a tough task ahead of them. Many businesses have started to rebound as consumer spending increases – prodded by government stimulus checks and other benefits. That being said, many adults remain unvaccinated and the virus hasn’t gone away. China’s rocky real estate market has some financial markets on edge. Future US government spending plans are caught up in partisan politics.

The Fed has been holding interest rates at rock bottom since March 2020 and is buying $120 billion in government-backed bonds monthly. This has worked in concert to keep mortgage rates low. But the time to act is now. Officials have signaled the slowing bond purchases is the first step toward change.
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