Current Affairs For Bank, IBPS Exams - 20 December, 2013

Current Affairs For Bank, IBPS Exams

20 December 2013

U.S. Federal Reserve

The U.S. Federal Reserve plans to begin tapering its monetary policy of quantitative easing in January, announcing that it would pare purchases of government-backed bonds by 10 billion dollars to 75 billion dollars a month.
If the job market continues to gradually improve and currently muted inflation does not slip toward deflation, the Fed will “likely reduce the pace of asset purchases in further measured steps at future meetings,” but bond buying is “not on a preset course.”
The Fed expects to maintain current interest rates - set near zero since December 2008 - at least until unemployment falls below 6.5 per cent, as long as inflation does not exceed 2.5 per cent and longer-term inflation expectations are “well anchored.”
The Fed’s monetary policy statement did not mention the budget deal, which passed the Senate minutes after Mr. Bernanke spoke and was headed to President Barack Obama to be signed into law.
The bond purchases have helped keep long-term interest rates low to encourage more borrowing and spending.
The Fed’s actions were approved on a 9-1 vote. The only member to object was Eric Rosengren, president of the Federal Reserve Bank of Boston. He called the move premature because unemployment remains high and inflation extremely low.
The Fed’s action comes after encouraging reports that show the economy is accelerating.
What’s more, the stock market is near all-time highs. Inflation remains below the Fed’s target rate. And the House has passed a budget plan that seems likely to avert another government shutdown next year. The Senate is expected to follow suit.
All of that could enhance the confidence of individuals, businesses and investors.