Fed officials saw taper starting in mid-November or mid-December

Federal Reserve officials broadly agreed last month they should start reducing emergency pandemic support for the economy in mid-November or mid-December, even as the delta variant continued to create headwinds.

“Participants generally assessed that, provided that the economic recovery remained broadly on track, a gradual tapering process that concluded around the middle of next year would likely be appropriate,” minutes of the Sept. 21-22 Federal Open Market Committee meeting released Wednesday said.

“Participants noted that if a decision to begin tapering purchases occurred at the next meeting, the process of tapering could commence with the monthly purchase calendars beginning in either mid-November or mid-December.”

Fed officials last month signaled they were close to beginning to scale back their $120 billion in monthly asset purchases and Chair Jerome Powell told reporters the process could start as soon as November and would likely end around mid-2022. The record of the closed-door debate showed U.S. central bankers grappling with high uncertainty on both sides of their mandate for full employment and stable prices.

Inflation is rising at the fastest pace in years and is well above the Fed’s 2 per cent goal. Some officials say supply bottlenecks and production tangles -- blamed on disruption as the economy reopens from the pandemic -- could sustain price pressures for longer than they expected. Consumer prices rose 5.4 per cent in September from a year earlier, the Labor Department reported Wednesday.

Fed officials last month projected price pressures would ease back close to their goal next year, but nine of 18 forecast at least on interest-rate increase during 2022, up from seven in June. The FOMC left rates near zero and said they would stay there until the labor market has reached maximum employment and inflation was on track to exceed 2 per cent “for some time.”