Fed Maintains Bond Purchase Program

The Fed decided against cutting back on its monthly $85 billion bond purchase program. In a statement following their September 17-18 meeting, Federal Reserve policymakers announced “Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.” The Fed again stressed that the economy has been expanding at a “moderate” pace. In a subsequent press conference, Fed Chairman Ben Bernanke explained that interest rates may remain unchanged until the unemployment rate drops “considerably below” 6.5 percent.  It is currently at 7.3 percent.

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