Brian Chappatta, Columnist

Fed Sets a Date With Bond Vigilantes in Eight Months

Chair Jerome Powell has until mid-2022 to see whether the pace of price growth reverts to the 2% trend.

November 3, 2021 at 7:23 PM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Fed Chair Jerome Powell won’t push to raise rates until the Fed is done buying bonds.
Photographer: Sarah Silbiger/UPI/Bloomberg

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Eight months. That’s how long Federal Reserve Chair Jerome Powell and his fellow policy makers have given themselves to keep the bond vigilantes at bay.

The U.S. central bank announced Wednesday that it would begin tapering its $120 billion of monthly bond purchases starting later in November in an acknowledgment that the American economy has made “substantial further progress” toward the Fed’s employment and inflation goals. It will scale back by $15 billion a month — $10 billion in Treasuries and $5 billion in mortgage-backed securities. That’s in line with consensus estimates across Wall Street and positions the Fed to no longer provide accommodation through asset purchases by mid-2022.