High inflation
US Federal Reserve throttles economic aid worth billions
The Federal Reserve (Fed) building. Photo: J. Scott Applewhite / AP / dpa
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In the USA too, concerns about persistently high inflation have recently grown. The Federal Reserve is now reducing its security purchases – but the key interest rate will remain unchanged for the time being.
In view of high inflation and solid economic growth, the US Federal Reserve is initiating the exit from its enormous aid programs to deal with the Corona crisis.
The Federal Reserve (Fed) announced on Wednesday that it would reduce its economic asset purchases from $ 120 billion per month by $ 15 billion for November. With the program, the Fed is pumping additional money into the financial markets to keep lending rates low and stimulate the economy.
The key interest rate, which is in the extremely low range of 0.0 to 0.25 percent, will not change for the time being. The monetary policy decisions had been expected in the financial markets, the Fed had prepared investors accordingly. Federal Reserve Chairman Jerome Powell wanted to explain the decisions on Wednesday evening at a press conference. The main tension on the stock markets is likely to be how the Fed is positioning itself on persistently high inflation and what signals it is sending about the possible schedule and pace of interest rate hikes.