Bernanke Hints Fed Could End Asset Purchases in 2014

The US Federal Reserve has maintained the rate of its asset purchase programme at $85bn (£54bn) a month, but could start scaling it back soon.

It also kept interest rates at a record low range of between zero and 0.25%.

Fed chairman Ben Bernanke said if the central bank’s forecasts were correct, it could begin slowing asset purchases by the end of 2013 and wind them down completely by the middle of 2014.

But he emphasised that the programme was tied to economic conditions.

“We have no deterministic or fixed plan,” Mr Bernanke told a press conference after the Fed’s latest two-day monetary policy meeting.

The Fed painted a brighter economic outlook, in which it expects the unemployment rate to continue to fall and inflation to edge closer to its longer term target of 2%.

US stocks fell sharply in afternoon trading as investors digested a possible scaling back of stimulus measures. The Dow Jones dropped 206 points, or 1.3%, to close at 15,112.

Benchmark 10-year US bond yields jumped to a 15-month high on expectations the Fed will reduce its bond buying.

via BBC

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