Date
17 December 2017
Federal chairwoman Janet Yellen says the central bank will pursue the phaseout of its massive stimulus program. Photo: Bloomberg
Federal chairwoman Janet Yellen says the central bank will pursue the phaseout of its massive stimulus program. Photo: Bloomberg

Fed cuts forecast but scales back bond buys

The Federal Reserve has downgraded its outlook for the US economy this year but pledged to pursue the phaseout of its massive stimulus program, the Washington Post reported on Wednesday.

The central bank cut its forecast for 2014 economic growth to between 2.1 percent and 2.3 percent, down from its previous estimate of nearly 3 percent. 

The Fed changed its forecast after the economy shrank 1 percent in the winter. Although the economy has returned to growth since then, it is unlikely to make up for the lost ground, the report said. The forecast for next year is kept at 3 to 3.2 percent.

Under its quantitative easing program, the central bank has purchased more than US$1 trillion in long-term bonds in a bid to bring down interest rates and boost economic activity.

Since January, it has gradually cut its purchases as the economy showed more signs of recovery. On Wednesday, the Fed decided to reduce them by another US$10 billion, bringing the amount of monthly purchases to US$35 billion, the report said.

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CG

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