|Joshua Zumbrun and Jeff Kearns|
The Federal Open Market Committee said yesterday it will cut monthly bond purchases by
It was the first meeting without a dissent since
“As we transition from Bernanke to Yellen, she’s in a pretty good place in terms of holding together the center of the committee,” said
Policy makers pressed on with a reduction in the purchases, put in place to speed a recovery from the worst recession since the Great Depression, even after payroll growth slowed in December and amid a rout in emerging-market currencies.
The Fed left unchanged its statement that it will probably hold its target interest rate near zero “well past the time” that unemployment falls below 6.5 percent, “especially if projected inflation” remains below the committee’s longer-run goal of 2 percent. U.S. stocks remained lower and Treasuries gained.
“The Fed is staying the course,” said
The Standard & Poor’s 500 Index extended losses after release of the statement, falling 1 percent to 1,774.20 in
The FOMC statement “introduced a little bit more clarity and certainty to markets on the direction of the Fed,” said
Treasuries gained earlier yesterday as South Africa’s central bank joined
The S&P 500 has fallen 4 percent this year, driven lower by a rout in emerging-market currencies that helped fuel a
Bond purchases will be divided between
The Fed’s decisions over the previous 20 meetings have met with dissent, either from those who opposed the Fed’s stimulus policies, or those who said the central bank should do more to boost the economy.
Seven regional Fed bank presidents have dissented since 2011. The Richmond Fed’s
Rosengren later withdrew his opposition, saying in an interview this month he would support a gradual tapering, even though he would have preferred to begin later.
The December’s decision was accompanied by a stronger commitment to keeping interest rates near zero until unemployment declines, an effort to keep long-term interest rates from rising as the Fed curtailed stimulus.
“To the extent that there are doves who had misgivings about tapering, they were probably quelled to a great degree that the forward guidance was strengthened,” Stanley said.
Fed district bank presidents rotate voting on monetary policy each year, with Cleveland’s
Economists surveyed by
Bernanke outlined the strategy for tapering at a press conference on
“If we’re making progress in terms of inflation and continued job gains, then I imagine we’ll continue to do probably at each meeting a measured reduction,” he said.
Since then, a
Other data have shown continued strength in an economy that expanded at a 4.1% annual pace in the third quarter, the most in almost two years.
Retail sales climbed for the ninth straight month in December as frigid temperatures prodded Americans to buy discounted winter clothing and shop online for the holidays. Industrial production last month capped the strongest quarter since 2010.
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