Federal Reserve Offers Positive Economic News

The Wall Streeet Journal reported that the U.S. Federal Reserve announced plans to scale back its purchases of mortgage and Treasury bonds to $25 billion monthly, while delivering a modestly more upbeat assessment of inflation, jobs and the economy, hours after a stronger-than-expected U.S. growth report.

“Economic activity rebounded in the second quarter,” the Fed said in its July policy statement, noting the labor market is improving, the jobless rate is declining, and inflation is moving closer to its 2% objective. It included a qualifier noting that a range of indicators suggest there is still “significant” slack in the job market.

Short-term rates will stay low for “a considerable time after the asset purchase program ends,” the Fed said.

The Commerce Department reported the economy grew at a 4% annual rate in the second quarter, bouncing back after a 2.1% first quarter contraction driven by bad weather.

The central bank also noted the movement of inflation toward its target. In previous statements, the Fed said inflation was running below its 2% objective. In the latest statement, it said inflation had moved “somewhat closer” to the objective. Officials also said the likelihood of inflation continuing to run below that target had diminished. S