90.9 WBUR - Boston's NPR news station
Top Stories:
PLEDGE NOW
Here and Now with Robin Young
Public radio's live
midday news program
With sponsorship from
Mathworks - Accelerating the pace of engineering and science
Accelerating the pace
of engineering and science
Wednesday, December 18, 2013

Fed Will Reduce Bond Purchases By $10B In January

Update 2 p.m.: The Federal Reserve says it will reduce its $85 billion a month in bond purchases by $10 billion starting in January, citing a stronger U.S. job market. And it says it will take further steps to reduce the pace of the purchases next year if that improvement continues.

The reduction is a signal that Fed policymakers are ready to ease their massive support for the economy provided since the Great Recession. The bond purchases have helped keep long-term interest rates low to encourage more borrowing and spending.

To cushion to impact on financial markets, the Fed strengthened its commitment to record-low short-term rates. It says it plans to hold its key short-term rate near zero “well past” the time when unemployment falls below 6.5 percent.

12 p.m.: Investors are waiting to see whether one of Ben Bernanke’s final acts as chairman of the Federal Reserve will be to announce a pullback in the Fed’s bond purchases. The purchases have been intended to keep long-term loan rates low to spur economic growth.

It’s a close call.

But most economists think that when the Fed’s latest policy meeting ends Wednesday, it will announce that it’s maintaining its pace of $85 billion a month in bond purchases despite a drop in unemployment to 7 percent and other improving economic data.

One factor in the Fed’s hesitance to reduce its stimulus is that inflation remains historically low. The Fed’s optimal rate is 2 percent. For the 12 months ending in October, consumer inflation as measured by the Fed’s preferred index is just 0.7 percent, well below its target. The Fed is as concerned about under-shooting the inflation target as over-shooting it. Both are seen as threats to the economy.

Guest


Please follow our community rules when engaging in comment discussion on this site.
Robin and Jeremy

Robin Young and Jeremy Hobson host Here & Now, a live two-hour production of NPR and WBUR Boston.

September 16 7 Comments

Kathy Gunst Explores Community Supported Agriculture

Kathy Gunst joins Cook's Illustrated executive food editor Keith Dresser at his CSA pickup and offers recipes for the seasonal CSA fare.

September 16 11 Comments

Remembering Jesse Winchester

Jimmy Buffett remembers his friend the late songwriter Jesse Winchester, whose posthumous album is being released today.

September 15 26 Comments

A Call To Reject Corporal Punishment As Part Of Black Culture

An incident of child abuse by an NFL player has raised questions about the use of corporal punishment as a form of discipline in the African-American community.

September 15 26 Comments

Would You Pay To Get Your Kid Into A Top College?

A San Francisco company charges parents for a consulting package based on the odds their student will get into a certain university, with prices up to a million dollars.