Members of the Federal Open Market Committee meeting Wednesday voted unanimously to continue tapering their bond-buying program, dropping to $35 billion in monthly purchases, down from $45 billion in April, citing “sufficient underlying strength” in the economy.
FOMC members also agreed that keeping the federal funds rate in the zero to 0.25% target range “likely will be appropriate … for a considerable time after the asset purchase program ends,” particularly as inflation remains low, said a statement released Wednesday at the end of the two-day meeting.
“We will respond to unfolding economic developments” in deciding whether to change that view, Federal Reserve Chairwoman Janet Yellen said at a news conference after the meeting. The federal funds rate could rise “as the economy picks up steam,” Ms. Yellen said, “but the opposite also holds true, and the timing and pace of interest rates could slow.
“The FOMC will adjust policy as to what it actually sees as unfolding in the economy as it unfolds over time. It is important for market participants to factor that into their decision-making,” Ms. Yellen said.
“You are hearing a sigh of relief in the market,” said Robert Tipp, managing director and chief investment strategist at Prudential Fixed Income. “The underlying concern in the markets was that there would be an acceleration in the pace of taper and rate hikes. The fact that on balance not much changed I think came as a relief. The market took it very well,” Mr. Tipp said.