by Angela Monaghan
Central bank's head, Janet Yellen,
confirms cessation of buying bonds in October after injection of £4.5
trillion over five years
The US Federal Reserve has called time on its $4.5tn bond-buying program, halting a radical monetary policy introduced nearly six years ago to steer the world's largest economy through the financial crisis.
The central bank, led by Janet Yellen, said the final tranche of bonds under its quantitative easing program would be bought this month, but it committed to keeping record low interest rates for "a considerable time".
Announcing the decision on QE, made at its October policy meeting, the Fed said: "The committee judges that there has been a substantial improvement in the outlook for the labor market since the inception of its current asset purchase program. Moreover, the committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability. Accordingly, the committee decided to conclude its asset purchase program this month."
It brings to an end a program which marked a departure for US monetary policy when it was launched in December 2008, hugely swelling the Fed's balance sheet in an effort to prop up a battered financial system. The Fed began to slow its purchase of Treasury bonds and mortgage-backed securities in January, but until now it had not confirmed an end date. The central bank has steadily reduced its monthly bond purchases from a peak of $85bn a month to $15bn a month.
Despite the end of its bond-buying program, US monetary policy remains ultra loose, with an interest rate range at a record low of between zero and 0.25% since December 2008.
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