Fed: Taper Continues; Adjust Economic Projections

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This is good news. The federal government should not have to “Buy” a stable economy. For a more detailed look at this subject – please read the article below.

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The Federal Open Market Committee (FOMC) concluded its June meeting with the announcement that members have once again voted to bring down the Federal Reserve’s stimulative monthly asset purchases.

Taking a cue from improvements in labor market indicators, household spending, and general economic activity, the committee members voted to reduce the Fed’s monthly purchase of agency mortgage-backed securities (MBS) to a pace of $15 billion per month, while purchases of longer-term Treasury securities will be cut to $20 billion per month.

Together, the cuts represent a scaling back of $10 billion in monthly additions, keeping with the committee’s pace so far. If the current course continues, the so-called “taper” could conclude by fall.

However, as usual, the FOMC made a point that “asset purchases are not on a preset course, and … will remain contingent on the Committee’s outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.”

Despite seeing overall improvement in the economy, board members did readjust their economic projections in light of recent news of a downturn in the first quarter.

For 2014, the committee now projects a 2.1–2.3 percent change in real gross domestic product (GDP), a sharp drop from March’s projection of 2.8–3.0 percent growth.

On the other hand, labor forecasts were more favorable. By the end of the year, the committee—perhaps encouraged by recently improved jobs numbers—expects the unemployment rate to be as low as 6.0 percent.

To read the complete article – please use the link below.

Fed: Taper Continues

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