The Federal Reserve announced Wednesday
that the bond buying stimulus program will begin to be scaled back beginning next
year. Beginning in January, the
Fed will buy $75 billion in
bonds each month, down from the $85 billion it had been buying since September 2012.
"In light of the cumulative
progress toward maximum employment and the improvement in the outlook for labor
market conditions, the Committee decided to modestly reduce the pace of its
asset purchases," the Fed said in a statement.
Fed officials have been stressing
lately that tapering does not mean "tightening" of the monetary
policy. In fact, the Fed extended its commitment to keep short-term interest
rates "exceptionally low" until either the unemployment rate falls to
around 6.5% or the inflation rate exceeds 2.5% a year.
Stocks jumped following the announcement, with the Dow
gaining 200 points after the news.
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