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Fed holds the line on US interest rates but may cut back on bonds

Chairman Ben Bernanke cautiously optimistic on economy, says any bond drawdown would occur in "measured steps."

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(Antler)

US Federal Reserve Chairman Ben Bernanke told reporters on Wednesday that the agency may start to ease up on monthly bond purchases if the economy keeps getting better (it's getting better?). 

Yes, albeit slowly, according to Bernanke, who expressed cautious optimism on the state of the economy as he briefed reporters following a two-day meeting of the Federal Open Market Committee (FOMC), said the Guardian

The Fed announced no change to interest rates. The US economy, meanwhile, is said to be recovering at a "moderate pace" and is expected to grow 3 percent to 3.5 percent next year, according to CBS News, citing a FOMC statement. As for the employment sector, the 12-member board saw "improvements" and predicted unemployment would fall from 7.6 percent to 7.2 percent by the end of 2013. 

Bernanke was careful to say any change to current US bond purchases — now at $85 billion a month — would take place in "measured steps," reported the Associated Press.

Because high bond purchases keep interest rates low, Barrons said stocks fell on the news, even though, as CBS' MoneyWatch put it: "Ben Bernanke and other Federal Reserve officials are in no rush to take away the punch bowl."

Bernanke is expected to leave the party soon himself, though, as speculation grows that he will resign at the end of his term in January.

US President Barack Obama went so far as to tell Charlie Rose on Monday that the chairman has already "stayed a lot longer than he wanted or he was supposed to," according to USA Today

http://www.globalpost.com/dispatch/news/regions/americas/united-states/130619/fed-holds-the-line-us-interest-rates-may-cut-bac