Log In


Reset Password
  • MENU
    National
    Friday, April 26, 2024

    Fed maintains $85B purchase pace

    Washington - The Federal Reserve will keep purchasing securities at the rate of $85 billion a month after the economy paused because of temporary forces including bad weather.

    "Growth in economic activity paused in recent months in large part because of weather-related disruptions and other transitory factors," the Federal Open Market Committee said Wednesday at the conclusion of a two-day meeting in Washington. "Household spending and business fixed investment advanced, and the housing sector has shown further improvement."

    Chairman Ben S. Bernanke has unleashed the power of the central bank to buy unlimited amounts of Treasury and mortgage-backed securities in a bid to end a four-year long period of unemployment above 7.5 percent and bolster an economy that shrank 0.1 percent in the fourth quarter.

    "There is no hint that they are giving any thought of backing off current policy and their current stance," said Wells Fargo Securities senior economist Mark Vitner in Charlotte, N.C. "Growth has slowed and inflation is running below expectations. To the extent the Fed's decisions are data dependent, all the relevant data suggest they should continue to ease."

    The Fed's asset purchases will remain divided between $40 billion a month of mortgage-backed securities and $45 billion a month of Treasury securities. The central bank also will continue reinvesting any Treasury securities that mature and will reinvest its portfolio of maturing housing debt into agency mortgage-backed securities.

    The Fed repeated that the purchases will continue "if the outlook for the labor market does not improve substantially."

    Comment threads are monitored for 48 hours after publication and then closed.