Fed: Economy not ready for taper
The Federal Open Markets Committee announced Wednesday they will continue buying assets at their current pace and keep interest rates low. Given weak labor market numbers for August and September and the government shutdown, which will delay the release of October’s numbers, the Fed’s decision to maintain their quantitative easing policy was widely expected.
Citing an elevated unemployment rate (7.2 percent in September) and a slowing of the recovery in the housing market, the Fed will await more evidence of economic improvement before tapering their purchase of $40 billion per month of agency mortgage-backed securities and $45 billion per month of long-term Treasury securities.
“Fiscal policy is restraining economic growth,” the committee said, referring to the budget stalemate and automatic spending cuts.
The announcement came at the conclusion of the committee’s two-day meeting. They have one more meeting before the end of the year, in December, and although Fed chair Ben Bernanke hinted at a September press conference that tapering this year was still a possibility, Fed-watchers don’t expect a change in policy until spring 2014.
A Bloomberg News survey predicted the Fed won’t taper its $85 billion in bond purchases until its March meeting.