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March 20, 2014

Fed shrinks stimulus again

“The Federal Reserve continued its slow exit from stimulus Wednesday.”

“The central bank announced it would cut by $10 billion the size of its monthly bond purchases that make up its latest round of quantitative easing, dropping it to $55 billion. In its policy statement, the Fed also abandoned a threshold it had previously set for when the central bank might be ready to raise rates.”

“Previously, the Fed had said it would not likely raise rates before the unemployment rate fell below 6.5 percent. But with the jobless rate at 6.7 percent and the Fed not ready to hike borrowing costs, that numerical threshold was scrapped.”

“Instead, the Fed said it would take into account a wide range of economic factors, including the job market, signs of inflation, and any new developments in financial markets.”

“The Fed statement was released shortly before Federal Reserve Chairwoman Janet Yellen was set to discuss the changes in her first-ever press conference as leader of the central bank.”

“On the broader economy, the Fed struck a somewhat optimistic tone, saying it expects there is enough underlying strength in the economy to further improve the labor market. The Fed also gave a nod in its statement to winter weather as a temporary factor that slowed economic activity in the first months of the year.”

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Read full Hill article here.

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