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

    Republicans Struggle With Reality of Trump Nomination

    Despite calls for unity by presumptive presidential nominee, analysts see inevitable fragmentation of party ahead of November election and beyond

    Spanish Warrants Point to Russian Govt. Links to Organized Crime

    Links to several Russians, some of them reputedly close Putin associates, backed by ‘very strong evidence,’ Spanish judge says

    Video US Worried Political Chaos in Iraq Will Hurt IS Fight

    Iraq needs stable, central government to push back against Islamic State, US says, but others warn that Baghdad may not have unified front any time soon

    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.
    Press Freedom in Myanmar Fragile, Limitedi
    X
    Katie Arnold
    May 04, 2016 12:31 PM
    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Press Freedom in Myanmar Fragile, Limited

    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Taliban Threats Force Messi Fan to Leave Afghanistan

    A young Afghan boy, who recently received autographed shirts and a football from his soccer hero Lionel Messi, has fled his country due to safety concerns. He and his family are now taking refuge in neighboring Pakistan. VOA's Ayaz Gul reports from Islamabad.
    Video

    Video Major Rubbish Burning Experiment Captures Destructive Greenhouse Gases

    The world’s first test to capture environmentally harmful carbon dioxide gases from the fumes of burning rubbish took place recently in Oslo, Norway. The successful experiment at the city's main incinerator plant, showcased a method for capturing most of the carbon dioxide. VOA’s Deborah Block has more.
    Video

    Video EU Visa Block Threatens To Derail EU-Turkey Migrant Deal

    Turkish citizens could soon benefit from visa-free travel to Europe as part of the recent deal between the EU and Ankara to stem the flow of refugees. In return, Turkey has pledged to keep the migrants on Turkish soil and crack down on those who are smuggling them. Brussels is set to publish its latest progress report Wednesday — but as Henry Ridgwell reports from London, many EU lawmakers are threatening to veto the deal over human rights concerns.
    Video

    Video Tensions Rising Ahead of South China Sea Ruling

    As the Philippines awaits an international arbitration ruling on a challenge to China's claims to nearly all of the South China Sea, it is already becoming clear that regardless of which way the decision goes, the dispute is intensifying. VOA’s Bill Ide has more from Beijing.
    Video

    Video Painting Captures President Lincoln Assassination Aftermath

    A newly restored painting captures the moments following President Abraham Lincoln’s assassination in 1865. It was recently unveiled at Ford’s Theatre in Washington, where America’s 16th president was shot. It is the only known painting by an eyewitness that captures the horror of that fateful night. VOA’s Julie Taboh tells us more about the painting and what it took to restore it to its original condition.
    Video

    Video Elephant Summit Results in $5M in Pledges, Presidential Support

    Attended and supported by three African presidents, a three-day anti-poaching summit has concluded in Kenya, resulting in $5 million in pledges and a united message to the world that elephants are worth more alive than dead. The summit culminated at the Nairobi National Park with the largest ivory burn in history. VOA’s Jill Craig attended the summit and has this report about the outcomes.
    Video

    Video Displaced By War, Syrian Artist Finds Inspiration Abroad

    Saudi-born Syrian painter Mohammad Zaza is among the millions who fled their home for an uncertain future after Syria's civil war broke out. Since fleeing Syria, Zaza has lived in Lebanon, Egypt, Jordan and now Turkey where his latest exhibition, “Earth is Blue like an Orange,” opened in Istanbul. He spoke with VOA about how being displaced by the Syrian civil war has affected the country's artists.
    Video

    Video Ethiopia’s Drought Takes Toll on Children

    Ethiopia is dealing with its worst drought in decades, thanks to El Nino weather patterns. An estimated 10 million people urgently need food aid. Six million of them are children, whose development may be compromised without sufficient help, Marthe van der Wolf reports for VOA from the Metahara district.
    Video

    Video Little Havana - a Slice of Cuban Culture in Florida

    Hispanic culture permeates everything in Miami’s Little Havana area: elderly men playing dominoes as they discuss politics, cigar rollers deep at work, or Cuban exiles talking with presidential candidates at a Cuban coffee window. With the recent rapprochement between Cuba and United States, one can only expect stronger ties between South Florida and Cuba.
    Video

    Video California Republicans Weigh Presidential Choices Amid Protests

    Republican presidential candidates have been wooing local party leaders in California, a state that could be decisive in selecting the party's nominee for U.S. president. VOA's Mike O’Sullivan reports delegates to the California party convention have been evaluating choices, while front-runner Donald Trump drew hundreds of raucous protesters Friday.
    Video

    Video ‘The Lights of Africa’ - Through the Eyes of 54 Artists

    An exhibition bringing together the work of 54 African artists, one from each country, is touring the continent after debuting at COP21 in Paris. Called "Lumières d'Afrique," the show centers on access to electricity and, more figuratively, ideas that enlighten. Emilie Iob reports from Abidjan, the exhibition's first stop.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8691
    JPY
    USD
    106.57
    GBP
    USD
    0.6891
    CAD
    USD
    1.2750
    INR
    USD
    66.589

    Rates may not be current.