Powell Points to 2021 Taper Start at the Jackson Hole

Speaking at the annual Jackson Hole Symposium, Federal Reserve Chair Jerome Powell stated that the central bank will begin the process of slowing down asset purchase as the U.S economy continues on the path to recovery, but will not be raising interest rates anytime soon.

Powell however warned about employment levels and stressed on the central bank’s message that the inflation is mainly due to disruptions in the supply chain. These disruptions are expected to be temporary are mainly caused by the surging pandemic.

Powell did not give any specific timeframe for reducing the $120 billion bond-buying program which was initiated in 2020 during the pandemic. The fed is expected to carefully monitor data and understand how the Delta variant will affect the economy. This led to US Stocks going up whereas Treasury yields and USD fell.

Vice-Chair Richard Clarida expressed his opinion on starting the tapering process sooner rather than later. Others including Atlanta Fed President Raphael Bostic and Dallas Fed President Robert Kaplan also agree that the tapering process should begin soon but in a gradual manner.

The Jackson Hole event was held virtually this year due to the risks that came with the pandemic. The event was limited to just one day where Powell’s speech was made public. The Central Bank also released data to the public once it was presented at the symposium.

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