# Fed May Start Reversing Pandemic Stimulus Programs in November

By Human Events · Published 2021-09-22 · News & Analysis › Economy · https://humanevents.com/news/fed-may-start-reversing-pandemic-stimulus-programs-in-november

> The Federal Reserve hinted it may start reversing its pandemic stimulus programs come November, and could raise interest rates next year. According to the Wall Street Journal, the Fed’s rate-setting committee revised its post meeting statement Wednesday to say that it may start to reduce or taper its $120 billion in monthly asset purchases as \[…\]

The Federal Reserve hinted it may start reversing its pandemic stimulus programs come November, and could raise interest rates next year.

[According to the](https://www.wsj.com/articles/fed-tees-up-taper-and-signals-rate-rises-possible-next-year-11632333617?mod=djemalertNEWS) *[Wall Street Journal](https://www.wsj.com/articles/fed-tees-up-taper-and-signals-rate-rises-possible-next-year-11632333617?mod=djemalertNEWS)**,* the Fed’s rate-setting committee revised its post meeting statement Wednesday to say that it may start to reduce or taper its $120 billion in monthly asset purchases as soon as its next meeting in early November.

“If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” the statement said.

New estimates released at the end of the two-day meeting showed half of 18 officials expect to raise interest rates by the end of 2022.

When the pandemic hit in March of 2020, the Fed cut its short-term benchmark rate to close to zero and it has been purchasing at least $80 billion a month in Treasury and $40 billion a month in mortgage bonds since June of 2020 to provide additional stimulus.

Per the *Journal:*

> *Fed officials laid out a three-part test to raise interest rates one year ago that would require inflation to reach 2% and be on course to exceed that while the labor market returns to levels consistent with maximum employment.*  *In December, they said they would buy bonds at the current pace until the economy had made “substantial further progress” toward their goals of reversing a shortfall then of around 10 million jobs since the start of the pandemic and moving inflation back to their 2% goal over time. The Fed’s asset portfolio has doubled to $8.4 trillion from $4.2 trillion in February 2020.* *Rising vaccination rates and nearly $2.8 trillion in federal spending approved since December has produced* *[a recovery like none in recent memory](https://www.wsj.com/articles/the-economic-recovery-is-here-rebound-jobs-stock-market-unemployment-biden-aid-package-11622642152?mod=article_inline)**.* *[Inflation has soared this year](https://www.wsj.com/articles/fed-chairman-powell-navigates-the-inflation-debate-11629730921?mod=article_inline)**, with so-called core prices that exclude volatile food and energy categories up 3.6% in July from a year earlier, using the Fed’s preferred gauge. The gains largely reflect disrupted supply chains, shortages and a rebound in travel associated with the reopening of the economy.*

Wednesday’s projections show half of the officials expected interest rates would need to rise at least 1 percent from their current level by the end of 2023 and by another three-fourths of a percentage point in 2024.