Powell signals Fed to keep buying bonds even as outlook improves

Bloomberg/Rich Miller/2-23-2021

“The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved,” [Fed chairman Powell] told the Senate Banking Committee Tuesday.

USAGOLD note: Judiciously, Powell left the Fed’s options open and did not light a fuse on bond buying. To taper, or even hint at it, is to send interest rates on a tear and stock market investors heading for the exits. Meanwhile, the bond portfolio continues to pile up at the Fed and we haven’t even gotten around to the $1.9 trillion stimulus package. That legislation, by the way, this morning went out of Committee and is expected to be voted on and passed by the House later this week, according to press reports. Here is what the Fed’s swelling balance sheet looks like on a chart – heading towards $8 trillion.

Federal Reserve Bank Balance Sheet
(2011-present)

Chart courtesy of TradingEconomics.com • • • Click to enlarge

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