WASHINGTON – The Federal Reserve said it will keep trimming the pace of asset purchases as the economy shakes off the winter doldrums, putting the central bank on a course to end the unprecedented stimulus program by the close of 2014.
Growth "has picked up recently," the Federal Open Market Committee said Wednesday in a statement in Washington, hours after a government report showed gross domestic product barely grew in the first quarter. "Household spending appears to be rising more quickly."
The committee pared monthly asset buying to $45 billion, its fourth straight $10 billion cut, and said further reductions in "measured steps" are likely. At that pace, the quantitative easing program intended to push down borrowing costs for companies and consumers would end in December.
"Tapering is on autopilot," said Thomas Costerg, a New York-based economist at Standard Chartered PLC. "You need a much bigger swing in the data to stop tapering and much more weakness than just a 0.1 percent print on GDP."
Stocks and Treasuries rose as the Fed repeated that it's likely to keep the benchmark interest rate close to zero for a "considerable time" after bond purchases end.
The Standard & Poor's 500 index climbed 0.3 percent to close at 1,883.95 in New York. The 10-year note yield dropped four basis points, or 0.04 percentage point, to 2.65 percent.
Fed officials led by Chairwoman Janet Yellen repeated long-term inflation expectations remain stable. The central bank's preferred gauge of consumer prices climbed 0.9 percent in the year through February and hasn't exceeded the Fed's 2 percent goal since March 2012.
The Fed, in its unanimous decision, kept its forward guidance on borrowing costs, saying it will consider a "wide range of information" in deciding when to raise the benchmark federal funds rate, or the cost of overnight loans among banks.
