Fed to finish $10bn monthly QE in October

THE FEDERAL Reserve revealed yesterday that its quantitative easing (QE) will finally finish in October, putting a date on the end to tapering for the first time.

The end date was made official by the Federal Open Market Committee (FOMC) yesterday. The timeline means the last $15bn (£8.76bn) in QE asset purchases remaining will be eliminated after October’s meeting. Until now, the size of the purchases has been cut by $10bn each month.

The Fed gave little more signal as to when interest rates might begin to rise. Chair Janet Yellen has previously suggested that increases may begin around six months after the end of QE.

Despite recent signs that inflation may be building, Fed officials argued that risks to consumer prices are “roughly balanced”, with below-target inflation as much of a threat as more rapid price growth.

But Capital Economics’ Paul Dales disagreed: “We now expect core inflation to rise to two per cent in January and to continue to edge up towards 2.5 per cent thereafter.”

“This will prompt the Fed to raise interest rates earlier and faster than widely expected,” he added.