US Fed preparing to remove stimulus 'soon' despite slower recovery

WASHINGTON - Rising COVID-19 cases have slowed the US economy's recovery, but the Federal Reserve on Wednesday said it may nonetheless "soon" be time to begin removing the stimulus it provided during the pandemic.

When the pandemic hit in March 2020, the Fed slashed its benchmark interest rate and began buying bonds and other securities to ease lending conditions and ensure the financial system would not seize up. Though Powell again stressed that the Fed will not increase the key borrowing rate until later, rising inflation makes it more likely the central bank will have to move sooner than expected.

The FOMC still attributes the recent price pressures to "transitory factors," and Powell said he expects the supply effect to "abate," allowing inflation "to drop back toward the longer run goal" of two percent. The Fed is currently buying at least $80 billion in Treasury securities and $40 billion in agency mortgage‑backed securities every month as part of its stimulus efforts.

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