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Essentials of Monetary Policy

Federal Reserve (Fed). The Fed Starts to Taper Its Asset Purchases

November 3, 2021
Francis Généreux
Principal Economist

Today, Fed officials took the first step toward normalizing the U.S. monetary policy. Discussed for months and signalled fairly clearly in September, the tapering of purchases and its monthly pace come as no surprise. The reduction of US$15B per month, from US$120B in October to US$105B in November and then to US$90B in December, is in line with our own forecasts. It would therefore appear that the Fed’s balance sheet growth policy undertaken in March 2020 will be ending in June 2022. The sum of the securities held by the Fed will have therefore increased from US$3,848B at the end of February 2020 to US$8,043B at the end of October 2021. Another US$420B will be added from mid-November to the end of the program.