By Paul Kiernan 

WASHINGTON -- Federal Reserve Chairman Jerome Powell said Wednesday that the central bank will begin to reduce the pace of its bond purchases "well before" raising interest rates.

Since last June, the Fed has been purchasing at least $120 billion a month of Treasury debt and mortgage-backed securities to hold down long-term borrowing costs. Since December, the central bank has said the economy must make "substantial further progress" toward its goals of maximum employment and 2% inflation before scaling back that policy.

"We will taper asset purchases when we've made substantial further progress toward our goals, from last December when we announced that guidance," Mr. Powell said in a virtual event held by the Economic Club of Washington, D.C. "That would in all likelihood be before -- well before -- the time we consider raising interest rates."

He reiterated that he thinks it's highly unlikely that the Fed would raise interest rates this year and noted that most central-bank officials see rates remaining near zero through 2023.

(More to come)

Write to Paul Kiernan at paul.kiernan@wsj.com

(END) Dow Jones Newswires

April 14, 2021 13:49 ET (17:49 GMT)