In a shift in monetary policy, the U.S. Federal Reserve announced today that it will reduce monthly bond purchases and will likely end this practice in March.
The Fed will buy $60 billion in bonds each month, starting in January, which is half the level before the November tapering and $30 billion less than it had been buying in December.
The Fed’s new forecast is to raise its benchmark short-term interest rate, and three times over the next year, which is higher than the single rate hike it had planned in September.
The Fed’s benchmark interest rate, or Fed Fund Rate, which now stands near zero, will influence consumer and corporate lending, whose interest rates are expected to rise by the same amount.
All of the above, in response to the inflationary indicators of the world’s largest economy, whose current level is 6.8%, in year-on-year figures.