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Fed May Withdraw Pandemic Support Early as Inflation Persists

At this point, the economy is very strong and inflationary pressures are high, and it is therefore appropriate, in my view, to consider wrapping up the taper of our asset purchases, which we actually announced at the November meeting, perhaps a few months sooner. And I expect that we will discuss that at our upcoming meeting in a couple of weeks. Of course, between now and then, we will see another labor market report, another inflation report, and we’ll also get a better sense of the new Covid variant as well before that — before we make that decision. And it’s really about transmissibility. It’s about the ability of the existing vaccines to address any new variant. And it’s about the severity of the disease once it is contracted. And we don’t know — I think we’re going to know — what I’m told by experts is that we’ll know quite a bit about those answers within about a month. We’ll know something, though, within a week or 10 days. And then, then, then and only then, can we make an assessment of what the impact would be on the economy. As I pointed out in my testimony, for now, it’s a risk. It’s not — it’s a risk to the baseline. It’s not really baked into our forecast.


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