Fed policymakers may give new bond-buying guidance 'fairly soon': minutes

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U.S. Federal Reserve policymakers may soon give new guidance on their plans for asset purchases, including for how long and in what maturities, as they seek to provide more support to markets and the economy, minutes from their November policy-setting meeting show.

FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS/Leah Millis

Most participants said the committee should move toward issuing forward guidance that links the pace and makeup of purchases to certain economic outcomes. Policymakers signaled they will end bond purchases before they begin raising interest rates, which were slashed to near zero levels earlier this year and are expected to remain there until at least 2023

Several policymakers also noted that there are limits to how much support the Fed could provide through purchases and expressed concern about unintended consequences, the minutes showed. However, a recent surge in coronavirus infections and the looming expiration of some of the Fed’s emergency lending facilities, after Treasury Secretary Steven Mnuchin asked the Fed last week to return unused funds, may require the central bank to act sooner than planned.

 

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