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Fed Reserve to Trim Bond Purchases Again
The U.S. Federal Reserve says it will continue to reduce its huge economic stimulus program in February because it detects continuing though uneven improvement in the country's economic and labor market conditions.
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The U.S. Federal Reserve says it will continue to reduce its huge economic stimulus program in February because it detects continuing though uneven improvement in the country's economic and labor market conditions.
Next month's cuts will reduce the central bank's combined purchases to $65 billion.
The Fed began more than a year ago to buy Treasury bonds and mortgage-backed securities at a rate of $45 billion and $40 billion per month, respectively. In January it reduced the pace to $40 billion and $35 billion and said it might phase out the program entirely by the end of this year if the economy strengthens sufficiently.
The Fed says the current low range of interest on federal funds (0%-0.25%) remains "appropriate" for at least as long as America's unemployment rate remains above 6.5%, projected inflation within the next two years stays below 2.5% and longer-term inflation estimates continue to be "well anchored."
The Fed adds that it is likely to maintain the current interest rate even if unemployment drops below 6.5%, especially if inflation remains below the bank's long-range target of 2%.
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