No change of course, as expected. Following a two-day meeting in Washington, the Monetary Policy Committee (FOMC) of the Fed confirmed the reduction of $ 10 billion per month of its liquidity injections into the financial system designed to streamline the credit and to support the activity.
As of October, the Fed will buy more than 10 billion of Treasury bonds and 5 billion of long-term assets backed by real estate loans, this month.
Economic activity increased “moderate”
If the economy continues to improve, this massive program of asset redemptions launched in September 2012 will be completed “at the next meeting” FOMC in a month and a half, marking the end of a third round of monetary easing that has swelled the Fed’s balance sheet to unprecedented levels.
Fed President Janet Yellen, noted in his press conference, Wednesday, Sept. 17, that it would probably take “decade” to that balance (currently around 4.500 billion), returns to a normal level.
In support of its decision, the Fed noted that the economy continues to grow “at a moderate pace.”
Maintaining the policy rate near zero
however Pointing remaining weaknesses in the American economy, the Federal Reserve says it is maintaining its main interest rate close to zero, level since late 2008.
It reiterates that the above will keep at that level for a period “considerable” after the end of its program of asset purchases. Janet Yellen explained this choice:
“We are comfortable with this formulation given that the economic outlook is little changed from June”
The Fed has previously suggested that the first rate hike – spied anxiously by markets -. should take place in mid-2015
“Under-utilization “resources on the labor market
To justify this caution, the Federal Reserve including tip ” underutilization “ resources on the American labor market, “slow” recovery in the housing market and inflation below its long-term (2%). “The labor market has not yet fully been given to” , said Janet Yellen. She emphasized that the 6.1% unemployment rate was still “well above” rate indicating full employment is between 5.2% and 5.5%.
The Fed also lowered its forecast Wednesday for economic growth for 2014 and 2015 gross domestic product (GDP) is expected to grow by 2.0% to 2.2% year on year in the last quarter . 2014
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