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.
