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41
FOMC MOVES
FORWARD ON
TAPERING
In its first meeting this year, the Federal
Open Market Committee (FOMC) voted to
once again cut back on the Federal Reserve's
bond-buying program.
Starting last month, the Fed began scal-
ing its monthly purchases to a combined $65
billion, down $10 billion from January's pace.
e call to taper the Fed's purchases was
the second in as many FOMC meetings. e
vote was unanimous.
In its public statement, the commit-
tee maintained a positive view of economic
activity, saying indicators point to growth in
recent quarters.
"Household spending and business fixed
investment advanced more quickly in recent
months, while the recovery in the housing
sector slowed somewhat," the statement
reads. "Fiscal policy is restraining economic
growth, although the extent of restraint is
diminishing."
e change in language strikes a more
positive tone than the December statement,
in which the committee noted the extent of
restraint "may be" diminishing.
While the committee noted that "[l]abor
market indicators were mixed"—the only
acknowledgement of December's dismal
jobs report—members held the view that
"economic activity will expand at a moderate
pace and the unemployment rate will gradu-
ally decline."
e meeting was the last to be held under
the leadership of Fed Chair Ben Bernanke,
who departed from his post at the end of
the month. His replacement: Janet Yellen,
who analysts don't expect will stray from her
predecessor's current course.
"[W]e expect [Yellen] to stick with the
plan to continue winding down the asset
purchases this year and begin [to] hike the
fed funds rate around mid-2015," said Paul
Ashworth, chief U.S. economist for research
firm Capital Economics.
First-time buyers accounted
for only 26 percent of
existing-home sales in
January, according to the
National Association of
Realtors.
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