The US Federal Reserve’s open market committee held its breath for another meeting and kept its target for the federal funds rate at 1.75-2% yesterday.
More importantly, in its quantitative tightening programme – a start to reducing the $US1.4 trillion of securities built up through quantitative easing since the global financial crisis got underway in 2008 – the bank will pull $US24 billion/month of maturing Treasury securities & $US16 billion/month of agency mortgage-backed securities from the market.
Other than that, Fed chair Jerome Powell issued the standard release, saying the labour market had continued to strengthen, economic activity had been rising at a strong rate, job gains had been strong on average, and household spending & business fixed investment had grown strongly.
Mr Powell did go a step further than earlier intentions to raise the rate, also mentioning the size, so it might be bigger than the occasional quarter percent. But he wasn’t committing to a when, saying that would depend on assessments of a large number of conditions.
Attribution: Fed release.