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article imageBernanke cuts bond purchases by another $10 billion per month

By Ken Hanly     Jan 30, 2014 in Business
Washington - The U.S. Federal Reserve Bank reduced its bond purchases, as part of the stimulus program, by another $10 billion per month as the Bank kept to its tapering plan.
Chair of the Bank, Ben Bernanke was able to adjourn his last policy-setting meeting without dissent from colleagues. This is the first time this has happened since June of 2011. The next meeting will see the new head Janet Yellen as chair. At the meeting there was no change in the policy pledge to keep interest rates low for some time in the future.
The Bank noted that the economy had picked up somewhat in recent quarters a development that prompted it to begin tapering the stimulus purchases. In February the Bank will still buy $65 billion in bonds per month but that is down from the $75 billion being purchased now. The move comes even though there were soft jobs numbers in December and the stock market has lost ground on problems in emerging markets.
Jack Ablin, chief investment officer at BMO Private Bank said: "They really want to move to the sidelines here and get out of the (bond buying) business," Ryan Detrick, who is senior technical strategist as Schaeffer's Investment Research said: "The ball was on the tee and they hit it exactly where they were supposed to, It seems like we're comfortable with the tapering and almost looking past it. Now the thing we're worrying about clearly is some of the ongoing issues in the emerging markets."
The top 17 Wall Street economists who were polled by Reuters expect the stimulus program to end by the end of 2014 and they also all believe that interest rates will not be hiked until at least 2015 in the third quarter. The major stock indices lost more than one per cent, and yields on ten year treasury bonds hit the lowest level since last October.
More about Stimulus plan, tapering, US Fed Reserve, Ben bernanke
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