Those holdings more than doubled after the pandemic recession hit as the Fed bought trillions in bonds to try to hold down long-term borrowing rates.
With prices for food, energy and consumer goods accelerating, the Fed’s goal is to cool spending — and economic growth — by making it more expensive for individuals and businesses to borrow.
In their statement Wednesday, the central bank’s policymakers noted that Russia’s invasion of Ukraine is worsening inflation pressures by raising oil and food prices.
Inflation, according to the Fed’s preferred gauge, reached 6.6% last month, the highest point in four decades.
Starting June 1, the Fed said it would allow up to $48 billion in bonds to mature without replacing them, a pace that would reach $95 billion by September.
Powell has said he wants to quickly raise the Fed’s rate to a level that neither stimulates nor restrains economic growth.
Sales of existing homes sank 2.7% from February to March, reflecting a surge in mortgage rates related, in part, to the Fed’s planned rate hikes.
job market: Hiring is strong, layoffs are few, unemployment is near a five-decade low and the number of job openings has reached a record high.
Powell has pointed to the widespread availability of jobs as evidence that the labor market is tight – “to an unhealthy level” that would tend to fuel inflation.
For now, with hiring robust — the economy has added at least 400,000 jobs for 11 straight months — and employers grappling with labor shortages, wages are rising at a roughly 5% annual pace.
What’s more, other central banks around the world are also raising rates, a trend that could further imperil global growth.