90.9 WBUR - Boston's NPR news station
Top Stories:
PLEDGE NOW
Here and Now with Robin Young and Jeremy Hobson
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.
Spotlight

Here & Now resident chef and cookbook author Kathy Gunst shares her list of the best cookbooks of the year.

Robin and Jeremy

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

December 18 Comment

College Counselor: ‘A Deferral Is Not A Denial’

Lisa Micele shares tips for applying to college — especially for students who have been deferred under early decision.

December 18 15 Comments

America’s Political Dynasties

Americans under 38 have only experienced one presidential election that did not involve a Bush or a Clinton.

December 17 2 Comments

Atticus Lish’s ‘Preparation For The Next Life’

The author's debut novel centers on an unlikely romance between an Iraq veteran and a Uyghur from China.

December 17 3 Comments

Diagnosing Ear Infections With Your Smartphone

The CellScope Oto is a clip-on gadget that turns a smartphone into an otoscope — the tool doctors use to check out a patient's eardrum.