Fed is ready for further tapering
By Bilal Jafar
Fed is ready to move forward in order to reduce the stimulus program but "cautiously" according to the latest minutes released on Wednesday.
This decision is in the perspective of decision of last month, where fed decided to reduce its monthly bond- buying program from $85 billion a month to $75 billion a month.This reduction in the stimulus program is also known as "Tapering".
As expected, the decision depends almost entirely on improvement in the job market.And as recent economic data showed that hiring got a boost in recent months, so in that perspective officials are ready to start slowing down the stimulus program a bit further.
"Many members judged that the Committee should proceed cautiously in taking its first action to reduce the pace of asset purchases and should indicate that further reductions would be undertaken in measured steps," the Fed said in the minutes.
Now as far as interest rate is concern, the Fed is still keeping its key short-term interest rate near to zero. The Fed has said it plans to keep rates low until the unemployment rate falls to around 6.5% or inflation exceeds 2.5% a year. But these targets are looking a bit far.
