Fed’s Intentions on Rates Remain Muddled

Federal Reserve policy makers have been at pains to convince investors that winding down the central bank’s asset purchases won’t necessarily lead to rate increases. But they made something of a muddle of that message on Wednesday.

In the statement released following its two-day meeting, the Fed’s policy-setting committee said that a reduction in the central bank’s monthly asset purchases “may soon be warranted.” Barring a serious setback—a worse-than-expected hit to the job market from the Delta variant, say, or the China Evergrande mess badly damaging global financial markets—that all but tees up a decision to begin tapering at the next Fed meeting in November. By sometime in the middle of next year, those purchases would fall to zero.