Fed bond buying ends in Oct

Jul 11 2014, 11:55 IST
Comments 0
US Federal Reserve. (Reuters) US Federal Reserve. (Reuters)
SummaryThe Fed said it planned to add a final $100 billion to its holdings of Treasuries and mortgage-backed securities over the next four months.

The US Federal Reserve said on Wednesday that it planned to stop adding to its bond holdings in October, in a sign of its confidence that the economy is gaining strength even as the central bank gradually withdraws its support.

The decision, described in an account of the Fed’s most recent policy-making meeting in June, signals the end of one of the central bank’s most aggressive efforts to stimulate the economy. The Fed, which started reducing its monthly purchases in January, said it planned to add a final $100 billion to its holdings of Treasuries and mortgage-backed securities over the next four months, for a total of $1.5 trillion.

But the account underscored that many Fed officials remained guarded in their optimism about the economy. It also suggested that they had not yet decided when to take an even more important step in their retreat: raising short-term interest rates for the first time since December 2008.

Investors generally expect the Fed to start raising interest rates next summer. The Fed said the decision to end bond purchases in October, rather than continuing purchases at a nominal level until the end of the year, should not be interpreted as evidence that rate increases were likely to begin sooner.

Fed officials disagree about the pace of retreat in large part because they disagree about how much more monetary policy can accomplish.

Ads by Google

More from India

Reader´s Comments
| Post a Comment
Please Wait while comments are loading...