MNI: Fed Set to Taper, Rate Hike Timing Under Debate--Minutes

The Federal Reserve is set to begin reducing its USD120 billion monthly bond purchases as early as its next meeting in November, but the timing of eventual interest-rate increases remain in question, minutes to the Fed's September meeting showed.

"All participants agreed that it would be appropriate for the current meeting's post-meeting statement to relay the Committee's judgment that, if progress continued broadly as expected, a moderation in the pace of asset purchases may soon be warranted," the minutes said.

Financial markets have been more aggressively pricing in possible rate increases as early as next year since the Fed's September forecasts showed a growing number of officials penciling in 2022 hikes -- even though the overall committee remains evenly split.

"The sectors most adversely affected by the pandemic had improved in recent months, but the rise in COVID-19 cases had slowed their recovery," the report said. "Inflation was elevated, largely reflecting transitory factors."

MNI has reported the Fed could have trouble divorcing its bond tapering timeline from market expectations for rises in the federal funds rate, according to ex-central bank staffers.