More Bonds… Please
The Federal Reserve is in the process of developing a plan to slowly cease the monthly $85 billion bond buying program. There are no indications of when such a plan would be implemented since the FED has yet to reach its target unemployment rate of 6.5%; Ben Bernanke, current Chairman of the Federal Reserve, called the recent drop to 7.7% “partial” and wants to see more improvement before his term expires. The FED will continue to keep short-term interest rates down as long as inflation is not an imminent concern.
The FED’s monetary policy has been credited for the recent economic growth in the U.S.; housing, consumer spending and investments have increased but some officials are apprehensive of the impact from tax increases and sequester cuts. Nevertheless, the economy is projected to grow between 2.3% to 2.8% this year with unemployment dipping to 7.3% which would still fall short of the goal the FED has set.