Fed to accelerate stimulus pullback in 2022

The Federal Reserve will pull back its monthly bond purchases at twice the pace it previously announced and likely end them in March. That puts the Fed on a path to start raising interest rates as early as the first half of next year.

What will this do? Now that unemployment rates are low, Federal Reserve Chairman Jerome Powell said it is time to address inflation. Because inflation has persisted longer than anticipated, Powell said Wednesday that the central bank’s move will help the economy grow. Borrowing costs may rise in the coming months. Even if the central bank does raise rates three times next year as expected, its benchmark rate will remain historically low, just below 1 percent. The S&P 500 rose 1.6 percent after the announcement, recouping nearly all its losses from the past two days. The Dow Jones Industrial Average and the Nasdaq composite also climbed 1.1 percent and 2.2 percent, respectively.

Dig deeper: Listen to Lauren Dunn’s report on how inflation affects ministries and families on The World and Everything in It podcast.