Federal Reserve reassures investors over bond purchases

28 June 2013

The Federal Reserve Bank has moved to calm investors over bond purchases, which it says will not stop until until the economy improves.

Markets in the US and across the world have been reeling after the central bank's chairman Ben Bernanke said the stimulus being given to the economy could be reduced.

These fresh comments are the strongest from any monetary officials since the downscaling of funding was first mentioned.

Currently, the bank spends $85 billion a month on bonds aimed at lowering interest rates in the long-term. However, Mr Bernanke said the Federal Reserve could begin lowering its bond purchases by the end of 2013 and remove them completely by the middle of 2014.

William Dudley, president of the Federal Reserve Bank of New York, said: "If labour market conditions and the economy's growth momentum were to be less favourable, I would expect that the asset purchases would continue at a higher pace for longer."

By Gary Cooper

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