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Fed cuts bond-buying but stresses easy policy

Published on Dec 19, 2013 4:31 AM

WASHINGTON (REUTERS) – The US Federal Reserve trimmed its aggressive bond-buying program on Wednesday but sought to temper the long-awaited move by suggesting its key interest rate would stay at rock bottom even longer than previously promised.

In what likely amounts to the beginning of the end of its unprecedented support for the US economy, the central bank said it would reduce its monthly asset purchases by US$10 billion (S$12.5 billion), bringing them down to US$75 billion.

The move, which surprised some investors, was a nod to better prospects for the economy and labor market and marks a historic turning point for the largest monetary policy experiment ever.

Fed Chairman Ben Bernanke said that if US jobs gains continue as expected, the bond purchases would likely continue to be cut at a “measured” pace through much of next year. They would probably be wound down “late in the year, certainly not by the middle of the year,” he said. “The recovery clearly remains far from complete."

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