The Fed left interest rates unchanged on Wednesday. But that was never in doubt. Bloomberg reports the real news:
The Federal Reserve will slow its purchases of mortgage securities, seeking to avoid disrupting the housing market as an economic recovery takes hold.
“The Committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010,” the Federal Open Market Committee said in a statement today after meeting in Washington. The $1.45 trillion program was scheduled to cease by the end of this year.
Chairman Ben S. Bernanke and his fellow policy makers indicated for the first time since August 2008 that the economy is accelerating, even as they recommitted to keep their benchmark interest-rate “exceptionally low” for an “extended period.” Today’s statement signals the Fed will maintain its stimulus measures to secure a recovery and reduce unemployment...
Officials left the target rate for overnight loans between banks at a record low of between zero and 0.25 percent. Today’s decision was unanimous.
Data from Europe on Wednesday highlights the gradually improving global economy. From Bloomberg:
Europe’s manufacturing and service industries expanded for a second month in September, suggesting the euro-region economy is gathering strength.
A composite index of both industries in the 16-nation economy rose to 50.8 from 50.4 in August, Markit Economics said today...
The euro-area services index rose to 50.6 in September from 49.9 in the previous month, today’s report showed. That was the first time in 16 months that the index has shown expansion in services. While a gauge of manufacturing remained below 50, indicating contraction, it increased to 49 from 48.2, the highest since June 2008.
Adding to signs of recovery, European industrial orders increased for a second straight month in July, the European Union’s statistics office in Luxembourg said today. Orders rose 2.6 percent from June, when they increased 4 percent.