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Photo: Susan Walsh/Getty Images

Federal Reserve chair Jerome Powell’s Wednesday press conference focused on all things tapering.

Why it matters: With a rate liftoff not expected until the end of next year at the earliest, a tapering — or reduction — of the Fed’s $120 billion per month asset purchases will be the first significant pullback of its emergency pandemic market support.

  • The last time the central bank pulled back on major asset purchases, in 2013, the surprise led to a Treasury sell-off — or “taper tantrum.” The Fed wants to avoid that this time.

State of play: The Federal Open Market Committee’s Wednesday statement says that the economy has made progress toward the committee’s goals — a prerequisite for tapering and an acknowledgment that wasn’t in its June statement.

What they're saying: Powell said in the press conference that the committee discussed how it could adjust the pace and composition of the asset purchases — currently $80 billion in Treasuries and $40 billion in mortgage-backed securities.

  • Composition is a hot topic as surging home prices have led to questions over whether the Fed should still be propping up the MBS market. Critics' thinking is that the Fed should taper MBS sooner or faster than Treasury purchases.
  • Powell knocked that down, saying there's "little support" for that idea.

What's next: The hunt for taper timing hints is on. The statement says the committee will continue to assess progress in coming meetings (plural) — leading many to surmise an announcement won't come at the FOMC's August Jackson Hole gathering, or its September meeting.

The bottom line: Unless inflation rates jump high enough to worry the Fed, it's all about jobs growth over the next few months. And Powell is pretty optimistic about the state of the labor market.

  • "We're clearly on a path to a very strong labor market, with high participation, low unemployment and wages moving up," Powell said, adding that "it shouldn't take that long" to get there.

Go deeper: Powell isn't concerned by Delta surge

Go deeper

Obama says Powell exemplified what America "can and should be"

Then-President Obama speaks alongside former Secretary of State Colin Powell during a meeting in the Oval Office in 2010. Photo: Saul Loeb/AFP via Getty Images

Former President Obama called Colin Powell an "exemplary soldier and an exemplary patriot" in a statement honoring the former general following his death from COVID-19 complications on Monday.

Why it matters: Powell, the first Black U.S. secretary of state, was known as a Republican but played a critical role in helping Obama get elected in 2008.

Colin Powell dies from COVID complications at 84

Photo: Paul Morigi/Getty Images for Capital Concerts

Colin Powell, the first Black U.S. secretary of state, died of complications from COVID-19, his family announced Monday. He was 84.

Driving the news: The Powell family said in a statement that he was fully vaccinated. He had undergone treatment for multiple myeloma, a type of blood cancer that can weaken the immune system, a spokesperson confirmed to Axios.

In photos: The life of Colin Powell

Photo: Paul Morigi/Getty Images for Capital Concerts

Colin Powell, the first Black U.S. secretary of state, died of complications from COVID-19 on Monday.

The big picture: In addition to serving as secretary of state from 2001-05, he also was the first Black security adviser to a president when he served for President Reagan and was the first Black chairman of the Joint Chiefs of Staff for President George H.W. Bush.

  • Powell was fully vaccinated but had undergone treatment for multiple myeloma, a type of blood cancer that can weaken the immune system, a spokesperson said.

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