Federal Reserve to taper economic support

The Federal Open Market Committee, the Fed’s policy-making arm, announced new plans on Wednesday for combating inflation and helping the economy recover. The group said economic growth exceeded expectations, and it will start reducing pandemic stimulus measures such as monthly bond purchases as early as November. The committee is also considering raising benchmark interest rates next year despite previous projections that it would not be necessary until 2023.

How is the economy doing? When the pandemic started, the Federal Reserve cut interest rates to close to zero and started buying assets each month to relieve the strain on the economy. Now that the economy is returning to its pre-pandemic size, tapering those programs should reduce inflation. U.S. stocks broadly rose after the announcement, and the Dow Jones closed up 338 points.

Dig deeper: Listen to financial analyst David Bahnsen discuss the Central Bank’s oversized influence on the U.S. economy.