FOMC; Federal Reserve policy statement and interest-rate projections

September 22, 2021

New York (Sept 22)  Market participants, investors, and traders are waiting for the conclusion of the September FOMC meeting tomorrow. They will focus intently on the most recent Federal Reserve policy statement and the newly updated interest rate projections vis-à-vis the “dot plot” which will give projections through 2024.

The statement will give insight for one of the biggest questions that might be answered, whether or not the Federal Reserve will give clarity to the current proposed timeline and commencement date in which the Fed will begin to taper its monthly $120 billion asset purchases. Currently, the Federal Reserve purchases $80 billion of U.S. debt and $40 billion of MBS (mortgage-backed securities) every month.

During the banking crisis and subsequent recession of 2009, the Federal Reserve accumulated an asset balance sheet of roughly $4.5 trillion. At the end of their “quantitative easing.” (QE1 through QE4) they began to liquidate assets and took their balance sheet down to $3.75 trillion before they felt a further reduction would harm the economic recovery. This new round of “quantitative easing” has caused their balance sheet to exponentially swell, and as of September 15, the Federal Reserve has amassed $8.4 trillion in assets.

Reuters

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