Business

Fed cuts bond purchases by another $10b, as expected

Chairwoman Janet Yellen says the jobless rate overstates the health of the economy.
Chairwoman Janet Yellen says the jobless rate overstates the health of the economy.Larry Downing/Reuters

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The Federal Reserve further curtailed its economic stimulus campaign Wednesday, announcing as expected that it would further reduce its monthly bond purchases because of the progress of the economic recovery.

The Fed also emphasized, however, that it expected to continue the centerpiece of its stimulus campaign, the suppression of short-term interest rates. Its policy making committee said that rates would remain at the current level, near zero, “for a considerable time” after it stops adding to its bond holdings, particularly if inflation remains sluggish.

The loose guidance about short-term rates replaced the Fed’s specific assertion that it would keep rates near zero at least as long as the official unemployment rate remained above 6.5 percent.

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