US Fed signals tapering could start soon

Washington: The US Federal Reserve has kept its benchmark interest rate unchanged at the record-low level of near zero, while signaling that the central bank may begin tapering asset purchases soon despite the ongoing economic uncertainty. The Fed on Wednesday pledged to continue its asset purchase program at least at the current pace of $120 billion per month until 'substantial further progress' has been made on employment and inflation since last December, reports Xinhua news agency.

"Since then, the economy has made progress toward these goals. If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted," the Federal Open Market Committee (FOMC), the Fed's policy-making committee, said in a statement after a two-day meeting.

"The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals," the statement said. At a virtual press conference on Wednesday afternoon, Fed Chair Jerome Powell said that the sectors most adversely affected by the pandemic improved in recent months, but the rise in Covid-19 cases slowed recovery.

"The Delta variant led to significant increases in Covid-19 cases resulting in significant hardship and loss and slowing the economic recovery. Continued progress on vaccinations would help contain the virus and support a return to more normal economic conditions," he said. Powell also mentioned that Fed officials downgraded their forecasts for the country's economic growth this year compared with three months ago, "partly reflecting the effect of the virus."