The Federal Reserve signalled it is ready to start unwinding its crisis-era stimulus programme as soon as its next meeting, suggesting that the central bank remains confident in the US outlook even as it acknowledges weak inflation readings.
The Fed kept rates unchanged at 1 per cent to 1.25 per cent at the meeting — as expected by financial markets. But in a sign of resolve on its policy committee, the Fed said in a statement that it was ready to start paring back the size of its balance sheet “relatively soon” as long as the economy stays on track.
Fed chair Janet Yellen has spent the year preparing the ground for the landmark moment when the Fed puts its quantitative easing programme into reverse. The Fed scooped up trillions of dollars of Treasuries and mortgage-backed securities during the crisis and has been reinvesting the proceeds of securities as they mature, maintaining its balance sheet at about $4.5tn.