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US Central Bank Trims Direct Support of American Economy

The U.S. central bank has decided to start trimming back its direct support of the American economy.

For more than a year, the Federal Reserve has been buying $85 billion of securities a month in an effort to keep interest rates low and boost job growth. But with the world's largest economy advancing steadily, Fed policy makers Wednesday said they would cut the asset purchases to $75 billion a month starting in January.

In a statement, the central bank said it sees "improvement in economic activity and labor market conditions" in recent months that are "consistent with growing underlying strength in the broader economy."

The policy makers said they expect to cut the asset purchases further in "measured steps" in the coming months, but set no timetable.

The Fed also kept its benchmark interest rate at near zero and said it expected to keep it that low "well past the time" when the country's unemployment rate, now at 7 percent, falls below 6.5 percent.

The central bank has for months been weighing whether to trim its economic stimulus measures, but has backed off when one economic trend or another has fallen.

Economist Mark Vitner at Wells Fargo Bank told VOA that many of the conditions that Fed policy makers cited in September as a reason to not cut the securities purchases have now diminished.



"There's less political uncertainty. There's still political uncertainty, but there's much less than there was then. Chances of a government shutdown early next year have gone down considerably since we got the budget deal. And the economy looks a lot stronger. Most of the economic news that we've gotten has not only come in stronger than expected, but some of it has come in much stronger than expected."



Fed chairman Ben Bernanke, in the final weeks of his eight-year tenure leading the world's most powerful central bank, was to talk about the agency's decision at a news conference (Wednesday afternoon).

Fed vice chair Janet Yellen has been nominated to replace him in February, and could win Senate confirmation in the coming days.

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