Investing.com - The Federal Reserve said Wednesday that it will start tapering its economic stimulus program from next month, but reiterated that interest rates will remain low in order to support the economic recovery.
The U.S. central bank said it would reduce its USD85 billion-a-month bond buying program by USD10 billion a month starting in January.
In his final press conference as Fed Chairman Ben Bernanke said the economy was continuing to show signs of improvement.
"Today's policy actions reflect the assessment that the economy is continuing to make progress, but that it also has much farther to travel before conditions can be judged normal," he said.
The Fed said interest rates are likely to stay low “well past the time that the unemployment rate declines below 6.5%, especially if projected inflation continues to run below” its targeted rate of 2%.
“The action today is intended to keep the level of accommodation the same overall and to push the economy forward,” Bernanke said. “We are committed to doing what is necessary to getting inflation back to target.”
Bernanke said the bank will seek to cut asset purchases at a “measured” pace of USD10 billion a month throughout the next year, if the labor market continued to improve as expected.
"Continued progress is by no means certain," Bernanke said. "The steps that we take will be data-dependent."
Bernanke said Fed Vice Chair Janet Yellen, who is set to succeed him when he steps down on January 31, fully supported the decision to begin scaling back monetary stimulus.
Ms. Yellen is expected to be confirmed by the Senate in a vote later this week to become the next Fed Chair.
The U.S. central bank said it would reduce its USD85 billion-a-month bond buying program by USD10 billion a month starting in January.
In his final press conference as Fed Chairman Ben Bernanke said the economy was continuing to show signs of improvement.
"Today's policy actions reflect the assessment that the economy is continuing to make progress, but that it also has much farther to travel before conditions can be judged normal," he said.
The Fed said interest rates are likely to stay low “well past the time that the unemployment rate declines below 6.5%, especially if projected inflation continues to run below” its targeted rate of 2%.
“The action today is intended to keep the level of accommodation the same overall and to push the economy forward,” Bernanke said. “We are committed to doing what is necessary to getting inflation back to target.”
Bernanke said the bank will seek to cut asset purchases at a “measured” pace of USD10 billion a month throughout the next year, if the labor market continued to improve as expected.
"Continued progress is by no means certain," Bernanke said. "The steps that we take will be data-dependent."
Bernanke said Fed Vice Chair Janet Yellen, who is set to succeed him when he steps down on January 31, fully supported the decision to begin scaling back monetary stimulus.
Ms. Yellen is expected to be confirmed by the Senate in a vote later this week to become the next Fed Chair.