Investors waiting for the Federal Reserve to begin tapering its easy-money policies will need to stay patient as the U.S. central bank opted to maintain its current course at today’s meeting. Expectations that the Fed might curb its current $85 billion in monthly bond purchases today proved to be premature. The Fed’s policy-making arm, the Federal Open Markets Committee (FOMC), decided to await more evidence of sustained economic progress before slowing the pace of its purchases. Accordingly, the Committee chose to keep its current monthly pace of buying $40 billion in agency mortgage-backed securities and $45 billion in longer-term Treasury securities. The Fed is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Combined, these moves should keep downward pressure on longer-term interest rates, support mortgage markets and help to make broader financial conditions more accommodative. Key results include a strengthened economic recovery and ensure that inflation, over time, is at the rate most consistent with the FOMC’s dual mandate of fostering maximum employment and price stability.
Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
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Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers: