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Fed reduces bond-buying program by $10 bln per month

Published time: December 18, 2013 19:05
Edited time: December 19, 2013 12:13
US Federal Reserve chairman Ben Bernanke.(AFP Photo / Nicholas Kamm)

US Federal Reserve chairman Ben Bernanke.(AFP Photo / Nicholas Kamm)

The Federal Reserve will decrease the amount of bonds purchased by the United States central bank, Chairman Ben Bernanke said Wednesday, by roughly $10 billion per month.

Bernanke was about to make his last scheduled news conference as head of the Fed on Wednesday afternoon when the bank’s newest plan was revealed.

The Fed has up until now spent $85 billion a month on bond purchases, but will reduce that significantly and split the difference in reductions to both mortgage-backed securities and Treasury securities.

“In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to modestly reduce the pace of its asset purchases,” reads a statement from the bank.

“Beginning in January, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $40 billion per month rather than $45 billion per month.”

The Federal Open Market Committee, or FOMC, voted near-unanimously for the change. The only dissenter was Eric S. Rosengren, according to a statement released Wednesday by the Fed, who feared a policy change was being enacted too much, too soon.

“[W]ith the unemployment rate still elevated and the inflation rate well below the target, changes in the purchase program are premature until incoming data more clearly indicate that economic growth is likely to be sustained above its potential rate,” Rosengren argued, according to the statement released by the central bank.

A Staff Economic Projections report also released by the FOMC on Wednesday was more optimistic, however. According to that study, the committee believes the 2014 unemployment rate forcast may now range from 6.3 to 6.6 percent, down from a range of 6.4 to 6.8 percent.

Upon news of the changes, stocks in the US rose almost immediately. Within minutes, the Dow Jones industrial average rose by 0.32 percent to 15,925.69, and the S&P 500 gained 0.02 points to 1,781.02, Reuters reported.

Bernanke will exit his role with the Fed in January and pass the torch to Janet Yellen, the current vice chair of the Board of Governors of the Federal Reserve System who is expected to continue Bernanke's policies while at the bank's helm.

Comments (14)


Johnathan Millar 08.01.2014 12:20

the fed is getting ready to throw the financial system into turmoil completly they are obviously running out of financial bombs at the average joe soap so they are going to collapse the whole lot and ben bernanke wont have to be blamed for it because there is a woman at the helm now


ZeroZeroZero 19.12.2013 16:18

Fed will be 100 years old on 22. december and nobody is talking about the most powerful company of all times - they rule the wprld since WW2. They create crisis, throw governments, which don't want to pay oil in dollars. With World Bank and IMF they destory complete nations - and still most of people (even americans) has no idea it exists.

And the irony of it all - if nobody turn back any dollar that FED "printed", nothing really changes, becouse they are made out of thin air. So all blood, problems and debt would be solved in a second if there were not greede egomaniacs runing economy - it's just a game of power.


Dod Frazer 19.12.2013 05:52

Delete This Comment 18.12.2013 21:57

They should just fire everybody, like 90% of the workforce.
Then foreclose and repossess all their houses and cars.
Make those Americans live on the streets where they belong!


Direct relatives of Ben Bernanke are not allowed to comment

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