Fed Likely to Open Bond-Buying ‘Taper’ Door, but Hedge on Outlook

Fed Likely to Open Bond-Buying ‘Taper’ Door, but Hedge on Outlook
Federal Reserve Chair Jerome Powell testifies during a U.S. House Oversight and Reform Select Subcommittee hearing, on Capitol Hill in Washington on June 22, 2021. Graeme Jennings/Pool via Reuters
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WASHINGTON—The Federal Reserve is expected to clear the way on Wednesday for reductions to its monthly asset purchases later this year and show in updated projections whether higher-than-expected inflation or a resurgent coronavirus pandemic is weighing more on the economic outlook.

Fed policymakers, who are wrapping up their latest two-day meeting, have been handed a conflicting set of developments since late July—signs of a slowdown in the service sector, a COVID-19 surge that has eclipsed that of last summer and weak job growth in August, all alongside still strong inflation—and been conflicted among themselves about how to react.