Washington, DC, United States (4E) – The U.S. Federal Reserve decided to keep its $85bn-a-month bond purchases, saying it needs more evidence of a sustainable improvement in the economy.
At the end their two-day meeting in Washington on Wednesday, the Federal Open Market Committee said that the housing sector recovery has eased in the past several months, and fiscal policy is restraining expansion in the economy.
In September, Fed officials unexpectedly decided to maintain the pace of their record monetary stimulus following months of speculation that they could begin tapering soon. The bond-buying program is aimed to push down long-term interest rates in order to boost spending, investment and hiring.
With rising mortgage rates and looming government shutdown and battle over raising the country’s debt limit in the coming weeks, Fed officials agreed in the meeting that more evidence of a sustained economic progress is needed before they will begin scaling back the bond-buying program.
Fed chairman Ben Bernanke said in June that he expects the central bank to begin pulling back this year, but with just one Fed policy meeting left in the year, that now looks unlikely.
The Fed also kept its statement unchanged about maintaining near zero interest rates “at least as long as” the unemployment rate is over 6.5 percent, so long as the inflation outlook hovers below 2.5 percent.