Fed Policy in Line with Forecasts

The Fed is following its plan and will reduce its quantitative easing (QE) bond-buying program by $15 billion per month starting in November.

The Federal Reserve’s Monetary Policy Committee (FOMC) has decided to leave the short-term interest rate at 0.00-0.25%.

In addition, U.S. government bond purchases were reduced by $10 billion per month, and bond purchases of mortgage-backed securities (MBS) were reduced by $5 billion per month.

Such a reduction in the QE limit will allow the Fed to end its QE by mid-2022. Until then, the Fed is conducting QE of at least $110 billion per month. This includes purchases of U.S. government bonds worth at least $70 billion and MBS bonds worth at least $30 billion.

In this context, the announcement of the unchanged interest rate and the reduction of the QE limit is in line with the previous market forecast, which has been indicated several times in the past.

However, this may change. Because the statement says that the Fed does not have a fixed measure and that the Fed will adjust the policy as needed.

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