Investing.com - The Federal Reserve in its Oct. 29-30 monetary policy meeting said conditions warranting the need to taper the pace of its monthly asset purchases should arrive in the coming months, a sign the U.S. central bank saw more robust recovery around the corner though still far enough away to keep ultra-loose policies in place.
The Federal Reserve is currently purchasing USD85 billion in Treasury holdings and mortgage debt a month to spur recovery, a monetary policy tool known as quantitative easing that drives down long-term interest rates, thus weakening the dollar.
A decision to taper the pace of assets will come when economic indicators point to an economy that is clearly gaining steam, though monetary authorities did not suggest when that time may arrive.
"During this general discussion of policy strategy and tactics, participants reviewed issues specific to the Committee's asset purchase program. They generally expected that the data would prove consistent with the Committee's outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months," the minutes read.
Some participants considered scenarios in which the Fed should consider tapering asset purchases before the labor market's outlook improved.
Overall, monetary authorities wanted to track economic indicators for a little longer to be sure the U.S. economy can stand on its own two feet before winding down stimulus programs.
"A couple of participants thought it premature to focus on this latter eventuality, observing that the purchase program had been effective and that more time was needed to assess the outlook for the labor market and inflation; moreover, international comparisons suggested that the Federal Reserve's balance sheet retained ample capacity relative to the scale of the U.S. economy."
Past and present rounds of quantitative easing have swelled the Fed's balance sheet to around USD4 trillion.
The dollar took the news in stride and maintained earlier highs, as the minutes fanned ongoing sentiments that the Federal Reserve will wait until early 2014 before tapering asset purchases
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.56% at 81.16.
The Federal Reserve is currently purchasing USD85 billion in Treasury holdings and mortgage debt a month to spur recovery, a monetary policy tool known as quantitative easing that drives down long-term interest rates, thus weakening the dollar.
A decision to taper the pace of assets will come when economic indicators point to an economy that is clearly gaining steam, though monetary authorities did not suggest when that time may arrive.
"During this general discussion of policy strategy and tactics, participants reviewed issues specific to the Committee's asset purchase program. They generally expected that the data would prove consistent with the Committee's outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months," the minutes read.
Some participants considered scenarios in which the Fed should consider tapering asset purchases before the labor market's outlook improved.
Overall, monetary authorities wanted to track economic indicators for a little longer to be sure the U.S. economy can stand on its own two feet before winding down stimulus programs.
"A couple of participants thought it premature to focus on this latter eventuality, observing that the purchase program had been effective and that more time was needed to assess the outlook for the labor market and inflation; moreover, international comparisons suggested that the Federal Reserve's balance sheet retained ample capacity relative to the scale of the U.S. economy."
Past and present rounds of quantitative easing have swelled the Fed's balance sheet to around USD4 trillion.
The dollar took the news in stride and maintained earlier highs, as the minutes fanned ongoing sentiments that the Federal Reserve will wait until early 2014 before tapering asset purchases
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.56% at 81.16.