The Fed’s Free Market Operations Committee outlined a scenario for a gradual slowdown in quantitative easing. Interest rates have remained unchanged, although inflation in the US is high.
The US Federal Reserve will begin to curb purchases of government bonds and mortgage bonds as early as mid-November. Their volume will decrease by $ 15 billion each month when the quantitative easing program is completely completed. This should happen around the middle of next year.
The reason for this step is inflation, which has remained at the highest level in the USA for the last 13 years for many months. However, the Fed has repeatedly said that this is a temporary phenomenon to which it is not yet necessary to respond with tougher measures.
The US dollar reacted to news from the Fed by weakening against the basket of major world currencies by 0.045 percent. However, this is not a major drop in the dollar’s exchange rate, for example, it has remained virtually unchanged against the euro. At the same time, it can be assumed that the Fed could raise interest rates next year as soon as the quantitative easing gradually slows down. In that case, the dollar could start to strengthen slightly.