The Federal Reserve’s Federal Open Market Committee considered easing monetary accommodations implemented in response to stronger economic conditions according to its post-meeting statement issued November 3. The Fed started making trillions in monthly bond purchases when the pandemic started but slowed its purchasing pace to $120 billion per month in June 2020. The Fed will soon reduce its monthly bond purchases to $105 billion monthly.
The Fed said it will continue to purchase bonds until the economy makes “substantial progress” toward its legally mandated goals of achieving two percent inflation and maximum employment. Supply shortages and high demand for goods caused by the pandemic have impacted the overall economy, but labor markets have suffered disproportionately. Pandemic-driven quits and retirements have left many job openings that remain unfilled. Service-related jobs in hospitality and travel have been especially hard-hit as consumers continued to stay home.
Fed Calls High Inflation “Transitory”
Federal Reserve policymakers continued to call current higher-than-expected inflation “transitory,” but did not explain how long high inflation is expected to last. Supply-chain logjams continued to negatively impact supply and demand for goods and services; in some cases, high demand and short supplies drove inflation higher: “Inflation is elevated, largely reflecting factors that are expected to be transitory. Supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to sizable price increases in some sectors.”
FOMC members did not raise the current benchmark interest rate range of 0.00 to 0.25 percent, but financial markets expect two or more rate hikes in 2022.
Fed Chair Expects Inflation to Remain High into Mid-2022
Fed Chair Jerome Powell commented on high inflation during a press conference given after the FOMC post-meeting statement: “Our baseline expectation is that supply chain bottlenecks and shortages will persist well into next year and elevated inflation as well.” Chair Powell continued: “As the pandemic eases, supply chain issues will abate and growth will move up. As that happens, inflation will decline from today’s elevated levels.”
Mr. Powell further commented that he expected labor markets to strengthen as the delta variant of the covid virus continues to decline.
Last week’s economic reports included readings on home price growth from S&P Case-Shiller Home Price Indices, data on new home sales, and the University of Michigan’s Consumer Sentiment Index. Weekly readings on mortgage rates and jobless claims were also published. 
Last week’s economic reporting included the National Association of Home Builders’ Housing Market Index reports on building permits issued and housing starts, The National Association of Realtors® reported on sales of previously owned homes, and weekly readings on mortgage rates and jobless claims were also published.
Last week’s scheduled economic news included readings on public and private-sector jobs and the national unemployment rate. Weekly readings on mortgage rates and jobless claims were also published.
Last week’s economic news included reporting on housing markets, housing starts, and building permits issued. Data on new and existing home sales were published along with weekly reports on mortgage rates and jobless claims.
Last week’s scheduled economic reporting included readings on consumer prices, retail sales, and the University of Michigan’s preliminary Consumer Sentiment Index. Weekly readings on mortgage rates and jobless claims were also released.
Last week’s economic reporting was limited due to the Labor Day holiday. Job openings were reported along with weekly readings on mortgage rates and jobless claims.