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18 Dec 2013
Taper time: Fed announces 10 billion taper
FXstreet.com (Córdoba) - The Federal Open Market Committee decided to begin scaling back its bond purchases in December, after months of speculations. Meanwhile the Fed kept the target range for the federal funds rate at 0 to 1/4 percent.
"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 the statement.
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 Fed also said it will continue to monitor economic performance and it could reduce the pace of asset purchases in further measured steps at future meetings if employment and inflation continue to move towards longer-run objectives.
Voting against the action was Eric S. Rosengren, who believes that, with the unemployment rate still elevated and the inflation rate well below the federal funds rate target, changes in the purchase program are premature.
"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 the statement.
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 Fed also said it will continue to monitor economic performance and it could reduce the pace of asset purchases in further measured steps at future meetings if employment and inflation continue to move towards longer-run objectives.
Voting against the action was Eric S. Rosengren, who believes that, with the unemployment rate still elevated and the inflation rate well below the federal funds rate target, changes in the purchase program are premature.