Some Fed members think asset purchases should be cut faster

Minutes from the last meeting of the US Federal Reserve (Fed) revealed that some bank officials argued that if inflation remains high, it is necessary to be prepared to accelerate the reduction in asset purchases and raise interest rates sooner than expected.

The Fed released the minutes of the Federal Open Market Committee (FOMC) meeting held on November 2-3.

The minutes of the last meeting, where the policy rate was kept constant in the range of 0-0.25 percent, and a decrease of $ 15 billion in the monthly asset purchase program of $ 120 billion was decided, showed that the members were worried about inflation.

"Some participants noted that if inflation continued to hover above levels consistent with the Committee's targets, the Committee should be prepared to adjust the pace of asset purchases and raise the target range for the federal funds rate sooner than members currently expect," the minutes said. statement was included.

In the recurring minutes, in which inflation increased by reflecting the factors expected to be mostly temporary, it was stated that the supply and demand imbalances related to the new type of coronavirus (Kovid-19) epidemic and the normalization of the economy contributed to significant price increases in some sectors.

In the minutes, it was noted that supply constraints are likely to persist longer than expected.

Emphasis on "flexibility" in policy adjustments

It was stated in the minutes that the economy continued to depend on the course of the virus, and that economic growth slowed down in the third quarter and remained significantly below the pace seen in the first half of the year.

In the minutes, it was stated that members expect inflation pressures to last longer than anticipated, and they continue to predict that the inflation rate will decrease significantly in 2022 as overall supply and demand imbalances decrease.

In the minutes, which pointed out that most of the members were worried about permanent inflation, it was shared that the uncertainty regarding the economic outlook remained high.

In the minutes, members cited upside risks to inflation, including those associated with strong demand and a tight labor market.

In the Fed's minutes, "Members stressed that maintaining flexibility in implementing appropriate policy adjustments based on risk management assessments should be a guiding principle in policy execution in the currently highly uncertain environment." assessment was included.