Fed scales back stimulus effort

The US central bank, the Federal Reserve, says it will next month begin scaling back a key strategy to stimulate the economy because of a stronger jobs market.

The Fed said that from January it would reduce its spending on US government bonds by $10bn a month.

Reporter

Mark Gregory

Report

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The Federal Reserve has been pumping money into the US economy by buying $85bn of bonds each month. From January, it will cut the figure to $75bn. And it has signalled that it will further reduce the scale of its bond buying if the economy continues to improve.

It's a small but highly significant step towards unwinding the extraordinary measures put in place to support the economy through six years of deep crisis.

The decision follows a run of data pointing to sustained if weak recovery and - the key factor - an improving jobs market.

But the Fed hasn't entirely kicked away the monetary props. It plans to keep short term lending rates at near 0% until it sees at least another 0.5% drop in the unemployment rate.

Investors responded by sending share prices higher. There was relief at the end to uncertainty over when the Fed, as has seemed inevitable for months, would start tapering off its monetary life support.

Vocabulary

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pumping: menyalurkan

signalled: menunjukkan

unwinding: menghentikan

kicked away: menghapus

props: bantuan, dukungan

tapering off: mengurangi secara bertahap