Tuesday 12 December 2017

Fed to keep up bond-buying plan

The Federal Reserve in the US has said that it will maintain the pace of its bond-buying programme to keep long-term interest rates at record lows.

The brighter view of the economy could be a hint the Fed is moving closer to reducing its bond purchases. But the statement issued after its policy meeting gave no indication of when that might happen.

The Fed will keep buying $85bn (€64bn) a month in bonds until the outlook for the jobs market improves. The goal is to lower long-term interest rates to encourage borrowing, spending and investing.

Investors reacted initially by selling both stocks and bonds. The Dow Jones industrial average was down 70 points shortly after the statement; minutes earlier, it had been down just 16. The yield on the 10-year Treasury note shot to 2.27pc, from 2.21pc before the statement.

The Fed said the economy was growing moderately and the "downside risks to the outlook" had diminished since autumn.

Irish Independent

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