WASHINGTON, DC (September 18, 2013) -- The National Association of Federal Credit Unions' (NAFCU) Director of Research and Chief Economist David Carrier issued the following statement regarding the Federal Open Market Committee announcement today that it was making no change in a key interest rate or in its pace of asset purchases.
“The Federal Reserve is holding steady because it believes the economy has not strengthened enough,” Carrier said. “The Fed is also worried about the impacts of the fiscal sequester, the upcoming debt ceiling debate and economic headwinds coming from China and Europe.”
In today’s policy announcement, the FOMC said it is leaving the federal funds rate target at 0 to 0.25 percent for now and is holding to its program of asset purchases, which are being made at a pace of $85 billion a month.The Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month.
Reports had speculated that the Fed could begin a slow tapering off of its asset purchases at a pace of $10 billion a month – just enough to ease without causing a spike in market rates. Carrier noted, however, there would still be some risk of a market reaction to any amount of tapering, even if undertaken very slowly.
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