Por Howard Schneider
WASHINGTON, Sep 17 (Reuters) – Facing a labor market that may be stagnating or about to take off, the Federal Reserve is set to signal next week that it will begin to reduce its monthly asset purchases provided there is a real change. in job creation in September in the United States and in the months after.
Fed officials, including Chairman Jerome Powell, have said that the $ 120 billion in monthly purchases of central bank bond purchases could be cut by the end of this year, as a first step towards ending policies against the health emergency implemented in the spring of 2020 to contain the first blows of the coronavirus pandemic.
But after an unexpectedly weak increase of 235,000 jobs in August, authorities will want to keep their options open, ready to cut bond purchases as soon as the Fed’s Nov. 2-3 meeting is held if job growth slows. recovers and the risks of COVID-19 decrease, although they could also delay any “start-up” if the virus hinders recovery.
“It’s hard to be enthusiastic to start cutting back on purchases if the pace of job creation has slowed down a lot,” said William English, a professor at the Yale University School of Management and a former Fed official who helped shape to the bond purchase program initiated by the central bank in response to the financial crisis and recession of 2007-2009.
“They will want more data,” English said. “And if it’s disappointing, they might end up waiting … It’s a deceptive position. They want to open the door but not compromise. That’s the mission.”
That dilemma raises the stakes for America’s next jobs report, due out Oct. 8. That data is likely to show whether the Delta variant of the coronavirus is having a deeper impact than Fed officials anticipated earlier this summer, when they said the economy appeared to be leaving the ravages of the pandemic behind.
“SUBSTANTIAL ADDITIONAL PROGRESS”
The Fed will hold its next policy meeting on Tuesday and Wednesday, a session that will include the release of new economic projections and readings on expectations around interest rates. The projections will incorporate a volatile summer data, which included job increases of nearly 1 million in both June and July – before the drop in August – unexpectedly strong inflation figures and a spike in COVID-19 infections and deaths. .