US Federal Reserve to end quantitative easing programme

Angela Monaghan
Wednesday 29 October 2014 14.27 EDT

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 programme, halting a radical monetary policy introduced nearly six years ago to steer the world's largest economy through the financial crisis.
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The central bank, led by Janet Yellen, said the final tranche of bonds under its quantitative easing programme would be bought this month, but it committed to keeping record low interest rates for "a considerable time".
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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 labour market since the inception of its current asset purchase programme. 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 programme this month."
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It brings to an end a programme 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.
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Despite the end of its bond-buying programme, 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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