They also said they will conclude asset purchases on schedule, leaving them on track to end in “early March.”
The Fed’s balance sheet stands at nearly $8.9 trillion, more than double its size before officials began massive asset purchases at the onset of the pandemic to calm market panic.
In a separate statement outlining the principles it would apply to reducing its balance sheet, the Fed said that over the longer run, it intends to primarily hold Treasury securities.
The Fed currently also holds mortgage-backed securities and the shift is aimed at minimizing its effect “on the allocation of credit across sectors of the economy,” it said.
Despite criticism that it has dragged its feet, the Fed is moving much quicker than it once expected to—prompted by the failure of inflation to fade as anticipated amid robust demand, snarled supply chains and tightening labor markets. As recently as September, central bank officials were split on whether any rate hikes would be warranted in 2022.
The meeting is the last of Powell’s current term as Fed chair, which ends in early February. He’s been nominated to another four years at the helm by President Joe Biden and is expected to be confirmed by the Senate with bipartisan support.
In his second term, Powell, 68, will need to persuade investors and the American public that the FOMC can successfully get inflation back down to the Fed’s 2% goal while also nurturing job gains as the labor market heals from the pandemic.
Biden last week endorsed the Fed’s plans to scale back monetary stimulus and said it’s the central bank’s job to rein in inflation, which has become a political headache for Democrats ahead of November midterm elections where they could lose their thin majorities in Congress.
—With assistance from Liz Capo McCormick and Steve Matthews.
This article was provided by Bloomberg News.