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.

July 22 2 Comments

Remains Of Clovis Boy Reburied In Montana

DNA from the boy buried 12,600 years ago shows his people were ancestors of many of today's native peoples.

July 22 Comment

After Malaysia Airlines Crash, A Closer Look At Planning Flight Paths

Retired pilot John Ransom discusses how to factor in war zones, and how the decision is made to close an airspace.

July 21 Comment

Boxing Attracts More Than Would-Be Fighters

At the Ring Boxing Club, boxers range in age, are both men and women, and include an award-winning author.

July 21 Comment

Why Hot Cars Are So Deadly

An average of 38 kids die in a hot car every year in the U.S. We look at the science of why cars get so hot so fast, and why children are more vulnerable.