Newsroom

June 18, 2014

Fed continues tapering, notes economic growth

June 18, 2014 - The Federal Open Market Committee announced it will continue its established pattern of tapering $10 billion in asset purchases per month this July, to a pace of $35 billion per month, and noted a rebound in economic growth in recent months.

NAFCU Senior Economist Curt Long analyzed the results of the committee's two-day meeting for a Macro Data Flash. Long commented, "At its current pace, the purchase program should wind down in the fourth quarter. While acknowledging weakness in the housing market, the committee signaled that the economy, and in particular the labor market, continue to show signs of progress."

The Fed will slow purchases of additional mortgage-backed securities to a pace of $15 billion per month, down from $20 billion, and of longer-term Treasury securities to $20 billion per month, down from $25 billion. The committee said it will keep its federal funds rate target at a range of 0 to 0.25 percent, which it said would be appropriate even after employment and inflation reach near mandate-consistent levels.

The committee also noted that inflation persistently below the 2 percent objective could pose risks to economic performance, and said it would monitor developments carefully over the medium term.