With the housing market recovery still fragile and unemployment stuck at stubbornly high 7.2 percent, members of the Federal Open Market Committee meeting in Washington decided to continue their $85 billion-per month controversial quantitative easing program.
In a statement released after the conclusion of its policy meeting, the Federal Reserve pointed to government spending cuts, the government shutdown and the debt ceiling debate as “restraining economic growth.”
While hinting that overall economy was expanding at a “moderate pace,” it did downgrade its assessment of the housing market slightly. The central bank has been buying $85 billion in bonds every month since September 2012, and it said it will continue to do so until joblessness improves “substantially.” To date, Fed chairman Ben Bernanke and his policymaking colleagues have swelled the Fed’s balance sheet to a record $3.7 trillion.
“The Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month,” said the statement.
Investors had previously thought the Fed would begin slowing down its stimulus plan by now, in a gradual wind-down known as “tapering.” With Janet Yellen expected to take over the Fed in January, there is a lot of uncertainty about how a Janet Yellen Fed will be.