Fed to begin removing support for the economy as inflation worries mount

The Federal Reserve will begin dialing back the extraordinary economic aid it has provided since the pandemic erupted in early 2020, a response to high inflation that now looks likely to persist longer than it did just a few months ago. As expected, the central bank left rates unchanged.

In a statement Wednesday after its latest policy meeting, the Fed said it will start reducing its $120 billion in monthly bond purchases in the coming weeks by $15 billion a month, though it reserved the right to change the pace of tapering. Those purchases have been intended to hold down long-term interest rates to encourage borrowing and spending. With the economy recovering, that's no longer needed.

Much watched among investors and economists were the Fed's comments about inflation, which Fed Chair Jerome Powell has consistently described as "transitory." Yet the consumer price index — which measures the cost of items such as housing and cars — has been elevated since April, with inflation hovering between 4% to 5%.