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Fed Treasury purchases slow

The Federal Reserve announced yesterday that it is to slow the pace of its purchase of $300 billion (£181 billion) of Treasury securities.

The move means Fed should complete its planned purchases in October, a month later than initially expected. It says the decision has been taken to “promote a smooth transition in markets”.

The Fed reviewed its system of purchasing government debt as central banks grapple with increasing liquidity in the market, while trying to avoid swamping it and making the debt unattractive.

While the Bank of England increased its asset purchase scheme by £50 billion at the last Monetary Policy Committee (MPC) meeting, the Fed kept the overall size of its program steady.

However, this relies on continuing signs of a return to sustainable economic growth, and the Fed says it “will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets”.


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