Fed hints rate rise as soon as next spring

Fed hints rate rise as soon as next spring


New U.S. Federal Reserve chief Janet Yellen
has kept policies set by her predecessor Ben Bernanke on track… by slashing another 10
billion dollars from the Fed’s monthly bond-buying program.
She also hinted at a rate increase,… which could come as soon as spring of next year.
Arirang’s Hwang Ji-hye has the details. 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.

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