News / Economy

US Central Bank Trims Direct Support of American Economy

The news conference of Federal Reserve Chairman Ben Bernanke appears on a television screen at a trading post on the floor of the New York Stock Exchange, Dec. 18, 2013.
The news conference of Federal Reserve Chairman Ben Bernanke appears on a television screen at a trading post on the floor of the New York Stock Exchange, Dec. 18, 2013.
TEXT SIZE - +
Ken Bredemeier
— 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.  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.

Fed chairman Ben Bernanke said policy makers now believe the U.S. economy will continue to advance, although it has much farther to go "before conditions can be judged normal."  Even so, he predicted the country's labor market will continue to improve, after adding nearly 3 million jobs since the asset purchases were started in September 2012.

"With fiscal restraint likely diminishing, with signs that healthful spending is picking up, we expect economic growth to be strong enough to support further job gains," said Bernanke.

Investors showed their approval of the Fed policy shift, with key stock indexes on New York exchanges surging more than 1 percent in the first hour after the central bank made its announcement.

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.  Bernanke said it would depend on further improvement in the economy.

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 says 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," said Vitner.

Bernanke is in his final weeks of an eight-year tenure as chief of the world's most powerful central bank, a period in which the U.S. economy sustained its biggest downturn since the Great Depression of the 1930's.
 
Fed vice chair Janet Yellen, who voted for the cut in asset purchases, has been nominated to replace Bernanke in February and could win Senate confirmation in the coming days.

You May Like

Algerians Vote in Presidential Election

There were few media reports of protests and clashes around the country, but so far no significant violence More

Sharks More Evolved than Previously Thought

The discovery could “profoundly affect our understanding of evolutionary history” More

Pakistan Military Asked to Protect Polio Workers

Request comes as authorities say a Taliban ban on vaccinations in 2012 and deadly attacks on anti-polio teams have prevented thousands of children from getting inoculated More

This forum has been closed.
Comment Sorting
Comments
     
by: BEN from: USA
December 18, 2013 6:40 PM
If the FED is public, then why when anyone steps on the property, you are surrounded by uniformed goons, telling you to get off PRIVATE property????????????????????????????????


by: Doris Flemming from: USA
December 18, 2013 6:37 PM
The FED, a PRIVATE so-called "bank" that is owned and operated by the sinister ROCKEFELLER FAMILY. FACT!!!!!!

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Google Buys Drone Companyi
|| 0:00:00
...
 
🔇
X
George Putic
April 15, 2014
In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Ray Bonneville Sings the Blues and More on New CD

Singer/songwriter Ray Bonneville has released a new CD called “Easy Gone” with music that reflects his musical and personal journey from French-speaking Canada to his current home in Austin,Texas. The eclectic artist’s fan base extends from Texas to various parts of North America and Europe. VOA’s Greg Flakus reports from Austin.
Video

Video Millions Labor in Pakistan's Informal Economy

The World Bank says that in Pakistan, roughly 70 percent work in the so-called informal sector, a part of the economy that is unregulated and untaxed. VOA's Sharon Behn reports from Islamabad on how the informal sector impact's the Pakistani economy.
Video

Video Passover Celebrates Liberation from Bondage

Jewish people around the world are celebrating Passover, a commemoration of their liberation from slavery in Egypt more than 3,300 years ago. According to scripture, God helped the Jews, led by Moses, escape bondage in Egypt and cross the Red Sea into the desert. Zlatica Hoke reports that the story of the Jewish Exodus resonates with other people trying to escape slave-like conditions.
Video

Video Police Pursue Hate Crime Charges Against Kansas Shooting Suspect

Prosecutors are sifting through the evidence in the wake of Sunday’s shootings in a suburb of Kansas City, Missouri that left three people dead. A suspect in the shootings taken into custody is a white supremacist. As VOA’s Kane Farabaugh reports, he was well-known to law enforcement agencies and human rights groups alike.
Video

Video In Eastern Ukraine, Pro-unity Activists Emerge from Shadows

Amid the pro-Russian uprisings in eastern Ukraine, there is a large body of activists who support Ukrainian unity and reject Russian intervention. Their activities have remained largely underground, but they are preparing to take on their pro-Moscow opponents, as Henry Ridgwell reports from the eastern city of Donetsk.
Video

Video Basket Maker’s Skills Have World Reach

A prestigious craft show in the U.S. capital offers one-of-a-kind creations by more than 120 artists working in a variety of media. As VOA’s Julie Taboh reports from Washington, one artist lucky enough to be selected says sharing her skills with women overseas is just as significant.
Video

Video UN Report Urges Speedier Action to Avoid Climate Disaster

A new United Nations report says the world must switch from fossil fuels to cleaner energy sources to control the effects of climate change. The Intergovernmental Panel on Climate Change released the report (Sunday) following a meeting of scientists and government representatives in Berlin. The comprehensive review follows two recent IPCC reports that detail the certainty of climate change, its impacts and in this most recent report what to do about it. VOA’s Rosanne Skirble has the details.
AppleAndroid

World Currencies

EUR
USD
0.7225
JPY
USD
102.27
GBP
USD
0.5953
CAD
USD
1.0982
INR
USD
60.349

Rates may not be current.