Federal Reserve Hints They’ll Reconsider “Easy Money” Policies If Economic Activity Picks Up

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  • Fed officials at their April meeting said “it might be appropriate at some point” to consider tapering asset purchases if the economy shows “rapid progress,” according to the meeting minutes.
  • Markets briefly sold off on the news as investors have been looking for clues about policy changes.
  • Officials remained largely unconcerned about inflationary pressures, which they see as transitory.
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Federal Reserve officials at their April meeting said a strong pickup in economic activity would warrant discussions about tightening monetary policy, according to minutes from the session released Wednesday.

“A number of participants suggested that if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases,” the meeting summary said.

Markets have been watching closely for clues about when the central bank might start tapering its bond purchases, which currently are at least $120 billion a month. The Fed balance sheet is just shy of $7.9 trillion, nearly double its level before the Covid-19 pandemic.

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