The Fed is buying $85 billion of Treasuries and mortgage bonds every month to put downward pressure on borrowing costs during the third round of its quantitative-easing stimulus program. It purchased $2.3 trillion of assets from 2008 to 2011 in the first two rounds.
Bernanke said last month after a two-day Federal Open Market Committee meeting the central bank may reduce the purchases this year and end them in mid-2014 if economic growth meets policy makers’ projections. Fed officials forecast expansion of as much as 2.6% this year and 3.5% in 2014.
The Commerce Department reported June 26 U.S. gross domestic product expanded at a revised 1.8% annualized rate from January through March, down from a prior estimate of 2.4%.
Policy makers have also kept the key interest-rate target at zero to 0.25% since 2008 to support the economy. A rate increase is “far in the future,” Bernanke said June 19.
The Fed has said it will keep the rate at almost zero as long as unemployment remains above 6.5% and the outlook for inflation doesn’t exceed 2.5%. Asset purchases may continue in 2014 until unemployment declines to about 7%, Bernanke said last month.