News Column

Fed Tapers Stimulus Again on Robust Economic Data

July 30, 2014

Kakumi Kobayashi, Japan Economic Newswire

Federal Reserve Chair Janet Yellen (file photo)
Federal Reserve Chair Janet Yellen (file photo)

The U.S. Federal Reserve decided Wednesday to scale back its stimulus spending by another $10 billion from August toward a possible end to the program in October on the back of robust economic and jobs data.

Growth in activity "has rebounded in the second quarter," the U.S. central bank said in a statement released after a policy-setting meeting of the Federal Open Market Committee.

"Labor market conditions improved with the unemployment rate declining further," the Fed said.

The Fed decided to reduce asset purchasing to $25 billion per month amid strong economic data, including the growth rate of an annualized real 4.0 percent in the April-June quarter and nonfarm payroll employment which topped the 200,000 line for the five months in a row through June.

The Fed maintained a policy of keeping its short-term interest rate at zero to 0.25 percent "for a considerable time after the asset purchase program ends," using the same phrase as in its statement released after the previous FOMC meeting in June.

Starting next month, the Fed will reduce the buying of federal agency mortgage-backed securities by another $5 billion to $10 billion each month and slash the amount of Treasury bond purchases by another $5 billion to $15 billion.

The Fed has tapered the $85 billion monthly stimulus package aimed at providing more money in the economy to the current size in steps since January.

Fed chief Janet Yellen said at a congressional session earlier in July that the central bank could end the quantitative easing through two more policy-setting meetings slated for September and October.


Original headline: Fed keeps tapering stimulus by $10 bil. on robust economy data

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Source: (c) 2014 Kyodo News

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