WASHINGTON (AFP) – The Federal Reserve on Wednesday left its $85 billion a month stimulus program in place, against broad expectations that it would reduce it as the economy grows.
Fed policy makers instead cut their growth forecast for this year and next, suggesting the economy is feeling the impact of government spending cuts and continues to struggle to break free from the Great Recession.
The Fed’s Federal Open Market Committee had been widely expected to begin reducing the bond-purchase program, aimed at pulling down long-term interest rates, after Fed Chairman Ben Bernanke predicted in May that the stimulus operation could be tapered late this year.
The FOMC said that although the economy appears to be holding up amid government “sequester” spending cuts, it “decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.”
Photo Credit: AFP/Brendan Hoffman