The Fed is about to wind down its emergency economic stimulus, Jerome Powell hints

The Fed, which has been buying $120 billion worth of Treasury and mortgage-backed securities every month since the height of the pandemic to support the economy, is expected to hit the brake pedal before long.

Interest rates are still near zero as well, though they won't move until the monthly asset purchases are addressed.

At the virtual Jackson Hole Symposium, Powell pointed at the progress the economy had made since last year's recession. The Fed, which is tasked with holding prices stable and achieving maximum employment, was looking for more progress on both those fronts in the past months before changing its policy.

On Friday, Powell said that the test for inflation has now been met and that "has also been clear progress toward maximum employment."

But that doesn't mean the money taps will be turned off right away.

"For now, I believe that policy is well positioned," Powell said. He also stressed that a reduction to the monthly shopping spree wouldn't be a direct signal to raise interest rates.

The minutes from the Fed's July meeting showed most central bank officials believed that the monthly asset purchases could be rolled back later this year if the economy keeps going at its current pace.

"The intervening month has brought more progress in the form of a strong employment report for July, but also the further spread of the Delta variant," Powell said.

Rising Covid-19 cases on the back of the more infectious Delta variant have been weighing on some economic indicators recently.

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