WASHINGTON (CNNMoney)
The job market is almost strong enough to stand on its own.
That’s the message from Federal Reserve officials, who decided Wednesday to start reducing their massive economic stimulus program.
Beginning in January, the Fed will buy $75 billion in bonds each month, down from the $85 billion it had been buying since September 2012.
“In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to modestly reduce the pace of its asset purchases,” the Fed said in a statement.
The bond-buying program has become so large, it’s expected to push the Fed’s assets to $4 trillion this week — money the Fed basically created out of thin air.
The new cut represents the beginning of a gradual wind-down process which Wall Street has nicknamed “tapering.”
But the complete end to Fed stimulus is still probably years away.
Fed officials have been stressing lately that tapering does not mean “tightening.” In fact, the Fed extended its commitment to keep short-term interest rates “exceptionally low” until either the unemployment rate falls to around 6.5% or the inflation rate exceeds 2.5% a year.
Most officials don’t expect that to happen until 2015.
That means, yes — you still stand a chance at locking in historically cheap rates on mortgages, car or business loans, albeit probably not at the record lows seen earlier this year.