Fed sees October end for bond buying

WASHINGTON (AP) – Federal Reserve officials are in broad agreement that they will likely announce an end to their monthly bond buying program in October, bringing to a close the third round of massive bond purchases the central bank has relied upon to boost economic growth following the Great Recession.

Minutes of the Fed’s June 17-18 meeting released Wednesday showed officials were in basic agreement that the if the economy continues to improve, the final reduction in bond purchases would total a cut of $15 billion and would be announced at the Fed’s Oct. 28-29 meeting.

With that final reduction, the Fed’s balance sheet will be close to $4.5 trillion, more than four times the amount of the balance sheet when the financial crisis struck in the fall of 2008. The Fed has purchased Treasury bonds and mortgage-backed securities as a way to lower long-term interest rates to give the economy a boost.

Fed officials have said they will not immediately start selling off the holdings, a move that could send interest rates rising. But instead will reduce the holdings only gradually.

The minutes showed that the Fed had a lengthy discussion on just how it planned to accomplish that reduction in its balance sheet but no final decisions were made. But the minutes said officials believed it will be important to have a “simple and clear approach” that could be communicated to financial markets and the public.

It said the Fed expected to release a plan later this year “well before the first steps” were taken to start reducing the bond holdings.