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The Taper Continues: Fed To Cut Bond Buying Program Again

In Bernanke's last committee meeting as chairman, the Fed announced more cuts to its program to stimulate the economy, citing further growth.
Posted at 6:36 PM, Jan 29, 2014

The taper continues. The Federal Reserve announced Wednesday it will knock another $10 billion off its bond-buying program in February.

In a statement, the Fed's Open Market Committee said its latest data show "growth in economic activity picked up in recent quarters" in the U.S., so the plan to cut back on stimulus programs will continue.

Chairman Ben Bernanke announced in December that the Fed's policy of buying $85 billion a month in bonds would taper off in 2014, starting with a cut to $75 billion in January. (Via C-SPAN)

Starting in February, the program will be cut to $65 billion. The plan is to continue cutting until the program ends, likely around November. 

The takeaway message is that the economy is growing. The Fed's statement outlined a few concerns but said the overall prognosis looks good. (Via The New York Times, NBC)

"You look deeper into this statement — really no bad news in there, except for maybe the housing market. The recovery in the housing market has slowed, but that's not a surprise to many people, either." (Via CNN)

One phrase that did keep popping up, though, was emerging markets. Over the past few weeks, we've been hearing about how investors are pulling their money from countries like Turkey and South Africa, sending currencies into a slump and causing stock markets to drag. (Via The Wall Street Journal, Bloomberg, Los Angeles Times)

But that apparently wasn't a big enough worry to keep the Fed from following through on its plans. And even though stocks took a tumble after the report was issued, analysts for CNBC agree that the Fed shouldn't be focused on emerging markets right now.

"It's not their job to fix the fact that all these countries ran current account deficits."

 

"It's a big recalibration of these markets. That doesn't yet mean it's an all-out, debt-crisis collapse."

This was Bernanke's last committee meeting as chairman. He's set to hand the reins over to Janet Yellen Friday.