U.S. Fed reduces bond purchasing programme by $10 billion

U.S. Fed reduces bond purchasing programme by $10 billion

The U. S. Federal Reserve has announced a monthly reduction of $10 billion in its bond purchasing programme that it had started in wake of global economic crisis to stimulate the country's economic growth.

Federal Reserve Board Chairwoman Janet Yellen announced that the central bank would be purchasing $55 billion of securities per month, down $10 billion from current $65 billion, starting next month.

Announcing the decision, Yellen said, "Starting next month we will be purchasing USD 55 billion of securities per month, down USD 10 billion per month from our current rate."

She also said that the central bank would keep on significantly expanding its holdings of longer-term securities, as well as rolling over maturing Treasury securities & reinvest principal payments from the Federal Open Market Committee's (FOMC's) holdings of agency debt in agency mortgage-supported securities.

She added that the FOMC viewed the decision of reduction in asset purchases as compatible with the decision-making framework that was laid out in December last year.

The Fed Chairwoman stressed that that declining 6.5 per cent unemployment threshold for considering an interest-rate rise didn't indicate any change in the FOMC's policy intentions. In December 2012, the FOMC has announced that the federal funds rate would be kept low at least as long as the rate of unemployment remained higher than 6.5 per cent and the outlook for inflation did not surpass 2.5 per cent.

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