The Fed, Leaving Rates Unchanged, Expects to Wind Down Stimulus Relatively Soon.'
'The Federal Reserve delivered no surprises on Wednesday after a two-day meeting of its policy-making committee. The Fed, which is wrapping up its post-crisis economic stimulus campaign, said in a post-meeting statement the next step would come “relatively soon” so long as moderate economic growth continues.
The Action
• The Fed left its benchmark interest rate in a range between 1 percent and 1.25 percent.
• The downsizing of the Fed’s bond holdings will begin “relatively soon.”
• The Fed noted the weakness of inflation, but said it expected a rebound.
The Takeaway
The Fed remains officially sanguine about a recent downturn in inflation. That is likely to reinforce market expectations that the Fed will tighten policy at its next meeting, in September. Rather than raising its benchmark rate, the Fed is expected to announce that it will begin to reduce its bond holdings.
The Fed accumulated more than $4 trillion in Treasury securities and mortgage-backed securities as part of its campaign to reduce borrowing costs for businesses and consumers. Under its exit plan, which it described in June, it would gradually reduce those holdings — initially at the slow pace of $10 billion a month.'>>>
https://www.nytimes.com/2017/07/26/business/economy/fed-meeting-yellen-balance-sheet.html?
