Investing.com The Federal Reserve on Wednesday left its key benchmark lending target, the fed funds rate, unchanged at 0.0-0.25% but said it was trimming its USD85 billion monthly asset-purchasing program by USD10 billion.
"Labor market conditions have shown further improvement; the unemployment rate has declined but remains elevated. Household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months," the Fed said in a statement.
Fiscal issues, such as the inability in the U.S. Congress to agree on budgets in the past are waning now that lawmakers have agreed on spending packages going forward.
Inflation, the U.S. central bank added, has been running below comfort zones around 2%, though longer-term inflation expectations have remained stable.
The Federal Reserve said it would buy USD75 billion in mortgage debt and Treasury securities a month to bolster the economy, though it added it could adjust that amount should recovery gain steam or deteriorate.
"If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings," the Fed's policy statement said.
"However, asset purchases are not on a preset course, and the Committee's decisions about their pace 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."
While the labor market appears to be on the mend, the Fed said policy will remain accommodative until the headline unemployment rate approaches 6.5% or even falls below that level, often seen by investors as a threshold to rethink policy.
"The Committee now anticipates, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal," the Fed said.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.08% at 80.15 after initially shooting up on the news.
The Dow Jones Industrial Average was up 0.79% at 16,000.61
"Labor market conditions have shown further improvement; the unemployment rate has declined but remains elevated. Household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months," the Fed said in a statement.
Fiscal issues, such as the inability in the U.S. Congress to agree on budgets in the past are waning now that lawmakers have agreed on spending packages going forward.
Inflation, the U.S. central bank added, has been running below comfort zones around 2%, though longer-term inflation expectations have remained stable.
The Federal Reserve said it would buy USD75 billion in mortgage debt and Treasury securities a month to bolster the economy, though it added it could adjust that amount should recovery gain steam or deteriorate.
"If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings," the Fed's policy statement said.
"However, asset purchases are not on a preset course, and the Committee's decisions about their pace 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."
While the labor market appears to be on the mend, the Fed said policy will remain accommodative until the headline unemployment rate approaches 6.5% or even falls below that level, often seen by investors as a threshold to rethink policy.
"The Committee now anticipates, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal," the Fed said.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.08% at 80.15 after initially shooting up on the news.
The Dow Jones Industrial Average was up 0.79% at 16,000.61