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Federal Reserve to End Stimulus Program in October
The Federal Reserve intends to phase out its bond-buying economic stimulus program in October assuming the American economy continues to expand at its current rate.
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The Federal Reserve intends to phase out its bond-buying economic stimulus program in October—assuming the American economy continues to expand at its current rate.
The Fed launched the program in September 2012 to prevent the country's weak economic growth from stalling.
The central bank began by buying Treasury bonds and mortgage-backed securities at monthly rates of $45 billion and $40 billion, respectively. Since January it has been reducing each type of purchase in $5 billion increments to a current combined total of $35 billion per month.
Analysts say the Fed announced a specific cutoff date to ease investor uncertainty about when the program would end. Now, they say, speculation will shift to when the bank will raise the overnight lending rate.
The interest rate has been at 0%-0.25% since the economic crisis began in 2008. The Fed reiterated in May it won't hike rates for a "considerable" period after winding down the asset purchase program.
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