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WED, 2014-10-22  KST

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Fed hints rate rise as soon as next spring

Updated: 2014-03-20 21:53:55 (KST)
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U.S. Federal Reserve officials have made another 10-billion dollar reduction in their bond-buying stimulus program, as widely expected.
After her first monetary policy meeting as Fed chair, Janet Yellen said Wednesday that the economy is strong enough to support continued improvement in the labor market.
The program was at 85-billion a month in December and the fresh cut will take it to 55 billion.
While Yellen said that the central bank expects to keep interest rates near zero for a "considerable time" after the bond-buying program ends this fall, she hinted that it could start raising rates next spring.

"The language that we use in this statement is considerable, period. So this is the kind of term it's hard to define, but probably means something on the order of around six months or that type of thing."

The Fed tried, however, to set the market at ease, saying it would look at a wide range of economic indicators to make a judgment on the economy's readiness for higher rates.
It also said that it would no longer link its future decision to increase rates to the unemployment rate, as the jobless rate has fallen faster than expected.
Despite the assurance, financial markets reacted swiftly to her comments, with U.S. stocks and government bonds falling.
Market analysts say that the Fed's fresh forecasts show a shift to a more hawkish policy stance than what they had been seeing just a few months ago.
Hwang Ji-hye, Arirang News.


Reporter : emilyfwang@arirang.co.kr

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