July saw another meeting for the Federal Reserve and talks of quantitative easing (QE3) continued to be the focus. When the June minutes were released, members of the Federal Open Market Committee (FOMC) were split on the idea of tapering stimulus by the end of the year. Judging by Wednesday’s release of the July 30-31 minutes, most policymakers were back on the same page with the tapering plan originally set in June.
Investors across the globe continue to scour the news for updates on when the Fed plans to slow the current $85 billion in asset purchases per month. September had been the assumed start, but the July meeting didn’t clear up any confusion on when the tapered bond buying would commence.
The original plan outlined by Fed Chairman Ben Bernanke in June mapped out a plan to taper bond purchases beginning later in 2013 and completely halting stimulus activities by mid-2014. This, of course, is only possible if the state of the economy and labor market improves prior to QE3.
The economy isn’t recovering at a fast enough rate to determine exactly when bond buying will slow, as the unemployment rate fell from 7.4 percent to 7.6 percent last month, and only 162,000 jobs were added. Job growth will have to improve and economic data will need to progress.
Ultimately, no policy change was formally made, and the economy continues to need support.
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