Economists expect the U.S. Federal Reserve to announce plans to taper its asset purchases this September, according to a new poll by the Reuters news agency.
A majority of economists also said they expect the U.S. jobless rate to remain above its pre-pandemic level for at least another year.
Since the release last week of a strong U.S. jobs report, which showed a drop in the unemployment rate to 5.4% in July, a flurry of Federal Reserve officials have suggested the U.S. central bank will start reducing its $120 billion U.S. in monthly purchases of Treasuries and mortgage-backed securities (MBS) sooner rather than later.
Nearly two-thirds of poll respondents said the U.S. central bank is likely to announce a taper of its asset purchases - currently set at $80 billion U.S. of Treasuries and $40 billion U.S. of MBS per month - at its September meeting.
More than one-third of respondents in the poll said the central bank's policy-setting Federal Open Market Committee (FOMC) will wait until November or December. None of the respondents said it would be announced at the central bank conference being held in Jackson Hole, Wyoming later this month.
Economists said they expect the U.S. unemployment rate to remain above its pre-pandemic level of 3.5% for at least another year. Regardless, the central bank is expected to keep its benchmark interest rate unchanged at near zero until 2023.
Buoyed by $1 trillion of fiscal stimulus, ultra-easy monetary policy and a rapid COVID-19 vaccination drive, the U.S. economy surpassed its pre-pandemic level with an annualized 6.5% expansion in gross domestic product (GDP) last quarter, the fastest recovery in the country’s history.
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