The Fed almost meets the conditions for tapping

The Federal Reserve “almost” meets the conditions under which it begins phasing out its monthly bond purchase program, called tapering. This was stated by President Jerome Powell during a hearing in the US Senate on Tuesday on the US economic recovery.

Powell echoed the central bank’s news of last week’s rate hike and confirmed the official Taper announcement in November. The chairman of the central bank stressed in his statement that until the central bank buys the securities, it will follow a compliant policy.

He noted that the problems in the supply chain should be reduced before inflation weakens. Powell, for example, acknowledged that supply problems had worsened in the automotive sector.

“This is supply-demand imbalance. Supply side problems must subside before inflation can subside,” Powell said.

Powell’s statement following the news that two central bank members are leaving. Boston Fed and Dallas Fed leaders Eric Rosengren and Robert Kaplan announced their exit on Monday amid statements of their trading activity, sparking criticism of the central bank’s ethical rules. Rosengren will leave anyway for health reasons.

Separately from Powell, his predecessor and current U.S. Treasury Secretary Janet Yellen delivered speeches on economics in the Senate on Tuesday.

Yellen mainly focused on the urgent increase in the US debt ceiling. If this does not happen before mid-October, the U.S. will run out of money, which Yellen says could lead to disaster. “The United States will return to normalcy for the first time in history,” the secretary said. That, he says, leads to a financial crisis and a recession.

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