Tapering is likely to end at the next Federal Open Market Committee meeting, according the latest September minutes.
Starting in October, the committee will add to its holdings of agency mortgage-backed securities at a pace of $5 billion per month rather than $10 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $10 billion per month rather than $15 billion per month.
“In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the committee decided to make a further measured reduction in the pace of its asset purchases,” the FOMC minutes stated.
And now that tapering is quickly nearing the end, the committee added, “If incoming information broadly supports the committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the committee will end its current program of asset purchases at its next meeting.”
But they cautioned that asset purchases are not on a preset course, and the decisions about their pace will remain contingent on the committee's outlook.
Two Fed Presidents voted against: Dallas President Richard Fisher and Philadelphia Charles Plosser.
President Fisher believed current market situations would likely warrant an earlier reduction in monetary accommodation.
Meanwhile, President Plosser objected to the guidance indicating that it likely will be appropriate to maintain the current target range for the federal funds rate for "a considerable time after the asset purchase program ends.”
The federal funds rate will maintain the current 0 to 1⁄4 percent target range.