Fed, Leaving Rates Unchanged, Expects to Wind Down Stimulus ‘Relatively Soon’<br />At its last meeting, in June, the Fed raised its benchmark interest rate for the third consecutive quarter, to a range of 1 percent to 1.25 percent.<br />• The Fed, as expected, left its benchmark interest rate in a range between 1 percent and 1.25 percent.<br />The agency also described its plans for reducing its bond holdings, a process that analysts expect to begin at the Fed’s next meeting.<br />In a statement after a two-day meeting of its policy-making committee, the Fed said it would start<br />reducing its bond holdings “relatively soon” so long as moderate economic growth continues.<br />Rather than raising its benchmark rate, the Fed is expected to announce it will begin to reduce its bond holdings.<br />The Fed has held borrowing costs at low levels since the financial crisis to increase economic activity by encouraging borrowing and risk-taking.<br />• The reduction of the Fed’s bond holdings is likely to begin in September.<br />The stance is likely to reinforce market expectations that the Fed will take action to increase borrowing costs at its next meeting, in September.<br />Janet L. Yellen, the Fed’s chairwoman, has acknowledged the recent weakness, but she has said that she expects inflation to rebound.<br />Several other members of the Fed’s policy-making committee have expressed concern about weak inflation in recent weeks.
