American monetary policy: The Fed has its sights set on a faster way to hike interest rates

Dhe US Federal Reserve Fed discussed a faster way to hike interest rates at its latest monetary policy meeting. Several participants argued that the Fed must be prepared for a faster pace in reducing its bond purchases. This increased pace could be appropriate in order to be able to initiate a rate hike earlier if necessary. According to the minutes of the meeting published on Wednesday, several monetary authorities called for flexibility as a guideline for monetary policy in an environment marked by uncertainty and increased inflation.

At the meeting on November 2nd and 3rd, the Federal Reserve finally agreed to throttle its securities purchases initially by $ 15 billion a month from mid-November. The total purchase volume of recently 120 billion dollars per month could thus be melted in the course of this so-called tapering by the middle of next year. This is a prerequisite for an interest rate hike. However, the central bank expressly reserved the right to increase or decrease the pace if necessary.

The outgoing Fed Vice President Richard Clarida has signaled that accelerated tapering could be discussed at the December interest rate meeting in view of the increased risk of inflation. Fed Director Christopher Waller was even more specific and called for the pace of dismantling to be doubled. Then the Fed could have melted its bond purchases as early as April. This would pave the way for a rate hike in the second quarter. The Fed is currently keeping the key rate in a range of zero to 0.25 percent.

The Fed chief of the San Francisco district, Mary Daly, was also open to the idea of ​​accelerated tapering – especially against the backdrop of the risk of inflation: The rate of price increases in the United States has recently risen to 6 in the wake of sharply rising energy costs and pandemic-related supply bottlenecks .2 percent higher than it has been in three decades. At the same time, the job market is noticeably recovering from the Corona crisis.

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