Fed made the following historic announcement today:
- QE program would end at month end
- Fed will keep reinvesting principal payments from its holdings to maintain its balance sheet at approx. $4.4 trillion
- The QE program had met the Federal Reserve’s goal of reducing unemployment
- Acknowledged that the labor market slack is “gradually diminishing”
- Assured its support of low interest rates for a considerable period of time, unless the economic data improves faster than its forecast
- Pointed to short-term downside risk to inflation
- Future rate hikes will depend on the pace of improvement in the job market
(Source: WSJ, Fed)
