Tags: Fed | taper | January | meeting

WSJ: Fed May Taper Another $10 Billion at January Meeting

Tuesday, 21 Jan 2014 12:00 PM

By Dan Weil

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The Federal Reserve is poised to taper its quantitative easing for a second time at its Jan. 28 and 29 meeting, despite the weak December jobs report, Fed officials indicate in interviews with The Wall Street Journal and in public comments.

The central bank may well cut its bond buying to $65 billion a month at the January meeting from $75 billion currently, the paper reported. In its first tapering in December, the Fed also pared its acquisitions by $10 billion.

"We're likely to continue on a path of gradual, measured reductions in the pace of purchases, assuming the economy tracks as we expect it to," San Francisco Fed President John Williams told The Journal earlier this month

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Outgoing Fed Chairman Ben Bernanke indicated at the Fed's December news conference that it would likely continue trimming quantitative easing by $10 billion per meeting as long as the economy continues its solid growth.

GDP expanded 4.1 percent in the third quarter, and some economists anticipate growth of at least 3 percent for the fourth quarter.

Many of them see the paltry 74,000 gain in December jobs as an aberration.

"The December jobs report was disappointing," Chicago Fed President Charles Evans said last week in a speech in Iowa, according to The Journal. But "the recent data on economic activity generally have been encouraging" and "importantly, the labor market has improved," he added.

Meanwhile, the International Monetary Fund (IMF) announced Tuesday that it has revised its estimate of U.S. economic growth for 2014 up to 2.8 percent from its October estimate of 2.6 percent.

"The pickup in 2014 will be carried by final domestic demand, supported in part by a reduction in the fiscal drag as a result of the recent budget agreement," the IMF said in its report. "But the latter also implies a tighter projected fiscal stance in 2015."

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