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12/18/2013 3:00:00 PM Write a Letter to the Editor Write a letter to the Editor

Fed to Cut Back Bond-Buying

The Federal Reserve Board of Governors voted Dec. 18 to reduce its bond-buying in the first major step to taper the quantitative easing it has conducted to prop up the U.S. economy during the recession.

The Fed will buy $75 billion of bonds monthly, down $10 billion from the previous level, Bloomberg News reported. The tapering cuts will be taken equally from U.S. Treasury and mortgage bond-buying.

The move is a major change in a large monetary policy experiment and signals a judgment that the economy is improving, Bloomberg said.

At its two-day meeting, the Fed also decided it likely will keep its target interest rate near zero, a policy it has not changed since 2008.

“Except for the tapering part, the Fed’s message was generally dovish, and that’s what the market was expecting,” Sebastien Galy, a New York-based senior foreign-exchange strategist at Societe Generale, told Bloomberg. “We’re entering a new regime where we’ll focus on the pace of rate hike.”

The announcement caused the U.S. dollar to fluctuate in value by as much as 0.4%, Bloomberg reported.

By Transport Topics

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