Federal Reserve to begin tapering bond-buying purchases

Nov. 3 (UPI) -- The Federal Reserve said Wednesday it plans to start tapering back its monthly bond-buying purchases, a program that had been enacted as an emergency response to the COVID-19 pandemic.

The Federal Open Market Committee made the announcement on the second day of its two-day meeting.

"In light of the substantial further progress the economy has made toward the committee's goals since last December, the committee decided to begin reducing the monthly pace of its net asset purchases," the FOMC statement said.

Beginning later this month, the FOMC will reduce its purchases by $10 billion for treasury securities and $5 billion for agency mortgage-backed securities. It will begin increasing its holdings of treasury securities by at least $70 billion per month and of agency mortgage-backed securities by at least $35 billion per month.

In December, the treasury securities will increase by at least $60 billion per month and the mortgage-backed securities by at least $30 billion per month.

Federal Reserve Chairman Jerome Powell had resisted ending the program, but there's been pressure to do so due to improving economic conditions.

The Fed often fights rising inflation with increases to key interest rates. However, Powell has previously said that an end to the bond program doesn't necessarily signal an immediate rate hike.

The Federal Reserve hasn't increased interest rates since the start of the coronavirus pandemic. Most forecasts predict that will occur sometime next year.

Clyde Hughes contributed to this report.