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March 21, 2013

Fed Not Ready to Tighten Policy—Yet

 

The Federal Reserve is developing a strategy to gradually wind down an $85 billion monthly bond-buying program, a centerpiece of its easy-money policies, though it won’t execute the plan until the economy gets onto more solid footing.

Fed Chairman Ben Bernanke, in a news conference Wednesday following a two-day policy meeting, said the central bank would vary the amount of its monthly bond purchases depending on how the economy is performing. This means it could slowly dial them down from the current pace as it becomes more convinced that the job market is improving.

When the Fed launched the bond-buying program in September, it said it would continue until it saw substantial progress in labor markets. While the jobless rate has dropped to 7.7% in February from 8.1% in August, Mr. Bernanke described the improvement to date as “partial” and “modest,” and made clear he wants to see more improvement before he changes his stance.”

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Read full Wall Street Journal article here

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