End of Asset Purchases

By Isaac Cohen*

At its last meeting, held in Washington DC on June 17-18, the central bank’s Federal Open Market Committee decided to end the purchase of assets, which it has gradually reduced throughout the year.

The reduction of asset purchases started with the year, when they stood at $85 billion per month. Since then, these purchases have decreased by $10 billion every month and in July they stood at $35 billion. Therefore, the Committee decided to terminate the program with two additional purchases of $10 billion and a final of $15 billion in October.

This concludes the application of one of the most extraordinary measures adopted by the Federal Reserve and other central banks, such as the Bank of England and the Bank of Japan,. to counter the profound recession which started in the United States in 2008.

The termination of asset purchases recognizes the strength gained by the economic recovery. However, as stated in the meeting´s minutes, it has “no consequences for the eventual decision about the timing of the first increase in the federal funds rate.”

It is the strength of the recovery which opens the door to interest rate increases, the other monetary policy measure adopted to stimulate the economy after the Great Recession. Although the central bank has not yet indicated when exactly these will start, some observers expect interest rates will start climbing by the middle of next year.

*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.

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About Ramón Jiménez

Ramón Jiménez, actual Managing Editor de MetroLatinoUSA. Periodista que cubre eventos de las comunidades latinas en Washington D.C., Maryland y Virginia. Graduado de la Escuela de Periodismo de la Universidad del Distrito de Columbia. Galardonado en numerosas ocasiones por parte de la Asociación Nacional de Publicaciones Hispanas (NAHP) y otras organizaciones comunitarias y deportivas de la región metropolitana de esta capital. También premiado en dos ocasiones como Mejor Periodista del Año por la cobertura de la comunidad salvadoreña; premios otorgados por la Oficina de Asuntos Latinos del Alcalde de Washington (OLA) y otras organizaciones. Ha sido miembro del jurado calificador en diferentes concursos literarios, de belleza y talento en la región metropolitana. Ha visitado zonas de desastre en Nicaragua, Honduras y El Salvador e invitado a esos países por organizaciones que asisten a personas de escasos recursos económicos. Antes trabajó en otros medios de prensa de Virginia y Washington, D.C., incluyendo reportajes para una agencia noticiosa mundial.

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