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Fed Continues Stimulus Reduction [AUDIO]

The Federal Reserve further backed off of its economic stimulus program Wednesday, reducing bond purchases by another $10 billion.

Ben Bernanke
Alex Wong, Getty Images

This winding down of the so-called “quantitative easing” has rattled Wall Street and overseas markets for more a week.

But Rider University finance expert Maury Randall says Janet Yellen, the new Fed chair replacing Ben Bernanke, is likely to continue with the same stimulus reduction policy.

“I would say that, for the most part, it’s going to be pretty much a continuation of what we’ve had previously,” Randall said.

Last month, along with the modest trim in its bond purchases, the Fed made clear that it plans to keep short-term rates historically low, “well past” whenever the unemployment rate dips below 6.5 percent. The rate is now 6.7 percent.

Randall said those low interest rates for savings will remain low. But he also said that if the Federal Reserve determines they took their foot off the economic stimulus accelerator too quickly — or too slowly — they can always change it.

The Fed decided in December to start trimming the bond purchases, mainly because of evidence that the economy is strengthening and needs less federal support.

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