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The Fed Leaves Rates Unchanged and Further Curbs Bond Buying to $65 Billion a Month

“The Federal Reserve will trim its monthly bond buying by $10 billion to $65 billion, sticking to its plan for a gradual withdrawal from departing Chairman Ben S. Bernanke’s unprecedented easing policy.

“Labor market indicators were mixed but on balance showed further improvement,” theFederal Open Market Committee said today in a statement following a two-day meeting in Washington that was the last for Bernanke, who will be succeeded by Vice Chairman Janet Yellen on Feb. 1. “The unemployment rate declined but remains elevated.”

Policy makers pressed on with a reduction in the purchases intended to speed a recovery from the worst recession since the Great Depression, even after payroll growth slowed in December and amid a rout in emerging-market currencies. Some officials have expressed concern that the Fed’s record $4.1 trillion balance sheet could help create asset-price bubbles.

The Fed left unchanged its statement that it will probably hold its target interest rate near zero “well past the time” that unemployment falls below 6.5 percent, “especially if projected inflation” remains below the committee’s longer-run goal of 2 percent.

The Fed repeated the inflation “persistently below its 2 percent objective could pose risks to economic performance and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term.”

The central bank’s preferred gauge of consumer prices climbed 0.9 percent in the year through November and hasn’t exceeded the Fed’s goal since March 2012.

Bonds, MBS

Bond purchases will be divided between $35 billion in Treasuries and $3o billion in mortgage debt beginning in February, the Fed said. It repeated that purchases are not “on a preset course.”

It was the first meeting with no dissent since June 2011, showing Fed officials coalescing around the central bank’s tapering strategy as Yellen, 67, prepares to take over the chairmanship from Bernanke…..”

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