Yellen signals an end to stimulus by this autumn
FEDERAL Reserve chair Janet Yellen confirmed yesterday that a continuing US recovery would mean an end to the country’s quantitative easing (QE) programme this autumn.
Though the Fed appears to be committed to trimming QE purchases by $10bn (£5.9bn) each month, the central bank has previously been reluctant to lay down an official timeline for the likely tightening of policy.
Yellen expressed optimism that the US economy would bounce back from weather-driven stagnation during the first quarter, calling the flat economic figures were largely caused by “transitory factors” and that spending and production are now on the rise again.
However, the Fed chair also expressed some concern about the US housing market, saying: “One cautionary note, though, is that readings on housing activity – a sector that has been recovering since 2011 – have remained disappointing so far this year and will bear watching.”
She added that a recent “flattening out in housing activity” could pose a risk to the general recovery, which has been boosted by increases in household net worth.