U.S. Federal Reserve Expected To Stay The Course At Latest Policy Meeting

The U.S. Federal Reserve is expected to stay the course on interest rates and monetary policy during its two-day meeting that concludes Wednesday (June 16).

However, some economists expect the U.S. central bank to mention that a tapering of its bond-buying program is coming but not fully commit to tapering just yet. The Federal Reserve will also release new economic forecasts, which it does on a quarterly basis.

The U.S. Federal Reserve is also expected to stand pat on interest rates, which it has said it will not raise until 2023, at the earliest. In its previous forecast, there was no consensus for an interest rate increase among Federal Reserve officials before 2023.

The central bank’s two-day meeting ends Wednesday afternoon with the release of its usual statement and quarterly economic forecast. Federal Reserve Chairman Jerome Powell will then hold a press conference that is closely watched on Wall Street.

Details of the tapering of the Federal Reserve’s $120 billion U.S. monthly bond purchases are expected to come later this year. Many economists expect the official discussion to begin in late August when central bank officials meet in Jackson Hole, Wyoming for their annual symposium.

The central bank could then begin unwinding its bond buying at the end of this year or the beginning of 2022.

Tapering the bond program is important because the end of the Federal Reserve’s so-called "quantitative easing" signals that the central bank would then be on a path to eventually raise interest rates.

The Federal Reserve began purchasing government bonds and mortgage securities last year as a way to provide liquidity when the pandemic shutdown the U.S. economy.