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Home Economy Fed on track to slow aid for economy later this year

Fed on track to slow aid for economy later this year

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WASHINGTON (AP) — The Federal Reserve will start dialing back its ultra-low-rate policies this year as long as hiring continues to improve, Chair Jerome Powell said Friday, signaling the beginning of the end of the Fed’s extraordinary response to the pandemic recession.

The Fed’s move could lead, over time, to somewhat higher borrowing costs for mortgages, credit cards and business loans. The Fed has been buying $120 billion a month in mortgage and Treasury bonds to try to hold down longer-term loan rates to spur borrowing and spending. Powell’s comments indicate the Fed will likely announce a reduction — or “tapering” — of those purchases sometime in the final three months of this year.

In a speech given virtually to an annual gathering of central bankers, Powell stressed that the beginning of tapering does not signal any plan to start raising the Fed’s benchmark short-term rate, which it has kept near zero since the pandemic tore…

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