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.
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

Video British Fighters on Frontline of Islamic State Information War

It’s estimated that several hundred British citizens are fighting for Islamic State alongside other foreign jihadists More

Pakistan's Political Turmoil Again Shines Spotlight on Military

Thousands of protesters calling for PM Sharif to step down continue protests in front of parliament, as critics fear political impasse could spur another military coup More

Photogallery Ebola Quarantines Spark Anxiety in Liberian Capital

Food prices rise sharply as residents attempting purchases clash with security forces, leaving one person dead 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.
Native Bees May Help Save Cropsi
X
Deborah Block
August 22, 2014 12:23 AM
U.S. President Barack Obama has called for a federal strategy to promote the health of bees that have been declining. The honeybee has been waning due to parasites, disease and pesticides. Wild bees may be used to take over their role as crop pollinators. Scientists first need to learn a lot more about wild bees, says biologist Sam Droege, who is pioneering the first national inventory on native bees. VOA’s Deborah Block went to his research laboratory in Beltsville, Maryland, to bring you more.
Video

Video Native Bees May Help Save Crops

U.S. President Barack Obama has called for a federal strategy to promote the health of bees that have been declining. The honeybee has been waning due to parasites, disease and pesticides. Wild bees may be used to take over their role as crop pollinators. Scientists first need to learn a lot more about wild bees, says biologist Sam Droege, who is pioneering the first national inventory on native bees. VOA’s Deborah Block went to his research laboratory in Beltsville, Maryland, to bring you more.
Video

Video US Defense Officials Plan for Long-Term Strategy to Contain Islamic State

U.S. defense officials say American air strikes in Iraq have helped deter Islamic State militants for the time being, but that a broad international effort is needed to defeat the extremists permanently. Defense Secretary Chuck Hagel warned Thursday that the group formerly known as the Islamic State in Iraq and the Levant, or ISIL, is better organized, and financially and militarily stronger than any other known terrorist group. Zlatica Hoke has more.
Video

Video Drug-Resistant Malaria Spreads in Southeast Asia

On Thailand’s border with Myanmar, also known as Burma, a malaria research and treatment clinic is stepping up efforts to eliminate a drug-resistant form of the parasite - before it spreads abroad. Steve Sandford reports from Mae Sot, Thailand.
Video

Video Gaza Conflict, Hamas Popularity Challenge Abbas

The Palestinian unity government of Mahmoud Abbas has failed to convince Hamas to agree to Egyptian-negotiated terms with Israel on a Gaza cease-fire. VOA State Department Correspondent Scott Stearns reports on what the Gaza conflict means for President Abbas, with whom U.S. officials have worked for years on a two-state solution to the Israeli-Palestinian conflict.
Video

Video Nigeria's 'Nollywood' Movie Industry Rolls in High Gear

Twenty years after its birth in a video shop in Lagos, Nigeria's "Nollywood" is one of the most prolific film industries on earth. Despite low budgets and whirlwind production schedules, Nigerian films are wildly popular in Africa and industry professionals say they hope, in the future, their films will be as great in quality as they are in quantity. Heather Murdock has more for VOA from Lagos.
Video

Video UN Launches 'Biggest Aid Operation in 30 Years' in Iraq

The United Nations has launched what it describes as one of the biggest aid operations in 30 years in northern Iraq, as hundreds of thousands of refugees flee the extremist Sunni militant group calling itself the Islamic State. As Kurdish and Iraqi forces battle the Sunni insurgents, the fighting has forced more people to flee their homes. Kurdish authorities say the international community must act now to avert a humanitarian catastrophe. Henry Ridgwell reports for VOA from London.
Video

Video Cambodian American Hip Hop Artist Sings of Personal Struggles

A growing underground movement of Cambodian American hip hop artists is rapping about the struggles of living in urban America. Most, if not all of them, are refugees or children of refugees who came to the United States from Cambodia to escape the Khmer Rouge genocide of the 1970s. Through their music, the artists hope to give voice to immigrants who have been struggling quietly for years. Elizabeth Lee reports from Long Beach, California.
Video

Video African Media Tries to Educate Public About Ebola

While the Ebola epidemic continues to claim lives in West Africa, information technology specialists, together with radio and TV reporters, are battling misinformation and prejudice about the disease - using social media to educate the public about the deadly virus. VOA’s George Putic has more.

AppleAndroid

World Currencies

EUR
USD
0.7492
JPY
USD
102.27
GBP
USD
0.5960
CAD
USD
1.0950
INR
USD
61.300

Rates may not be current.