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Bernanke says Fed aiming for reduced purchases

June 19, 2013 at 3:39 PM   |   Comments

WASHINGTON, June 19 (UPI) -- U.S. Federal Reserve Chairman Ben Bernanke said Wednesday the central bank could begin to slow down its asset purchasing program by the end of 2013.

The U.S. Federal Reserve said Wednesday it would maintain its $85 billion per month asset purchases for now. But in a press conference, Bernanke said the bank could slow down the $85 billion per month program before the end of the year, The Wall Street Journal reported.

The Fed also lowered its economic forecasts slightly Wednesday.

The big question for Wall Street was what signal the Fed would give concerning its economic stimulus program called quantitative easing, which is currently buying $40 billion in mortgage-backed securities and $45 billion per month in Treasury securities.

In its official release Wednesday, the Fed said it would "continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability."

The Fed said inflation remained tame but the employment picture, while improved, was still in an unacceptable rut.

No policy change was expected immediately. Many Fed observers, however, were looking for a clue into the next step.

The rollback question was answered officially in the press release: "The committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes," the central bank said.

The Fed also released its latest economic forecasts. For 2013, the Fed said the gross domestic product could grow by 2.3 percent to 2.6 percent. In March, that projection was set at 2.3 percent to 2.8 percent.

For 2014, the Fed predicts growth of 3 percent to 3.5 percent. In March, the forecast for 2014 was set at 2.9 percent to 3.7 percent.

The Fed said the unemployment rate was expected to show some improvement, dropping to 7.2 percent to 7.3 percent in 2013 and to 6.5 percent to 6.8 percent in 2014.

Previously, the Fed said unemployment would be in the range of 7.3 percent to 7.5 percent in 2013 and from 6.7 percent to 7 percent in 2014.

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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