Bernanke Ends Fed Reign with More Tapering

The Federal Reserve broke from its latest economic policy meeting announcing that it would continue in the direction laid out in recent months by its outgoing Chairman Ben Bernanke.

The Federal Open Market Committee surprised few by holding the federal funds rate at a range between 0% and 0.25%. It reiterated past statements by Bernanke, serving in his last meeting as Fed chairman, that this would continue so long as unemployment remains above 6.5% and inflationary pressures do not surge. Also expected was further stimulus tapering to the tune of $10 billion total dollars per month. The Fed will continue adding to holdings of mortgage-backed securities, but by $30 billion per month instead of $35. At the last meeting of 2013, it reduced the pace down from $40 billion. It also decreased purchases of longer-term Treasury securities from $40 billion per month to $35 billion, mirroring the $5 billion decline also enacted at its previous meeting. Those actions received an increasingly rare unanimous vote by FOMC members, including incoming Chair Janet Yellen.

In its statement, the FOMC also noted what it saw as recent positives (economic growth acceleration, overall labor market improvement, business fixed investment increases, stable inflation expectations) and negatives (housing recovery slowdown, fiscal policies that continue to restrain growth) within the overall economy.

- Brian Shappell, CBA, CICP, NACM staff writer

For coverage on how the Fed's tapering activity is negatively affecting emerging economies around the globe, check out this week's edition of eNews, available late Thursday afternoon (EST).

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