Fed Cites Improved Labor Market, Ends QE as Planned

The Federal Reserve cited improvements in the labor market as a reason for ending its asset purchase program, while maintaining low interest rates. New language in their guidance addresses concerns about low inflation and economic improvements. The Fed anticipates keeping the federal funds rate low unless inflation and employment progress faster than expected. Inflation remains below the target, but the likelihood of it staying low has decreased. Economic activity is expanding moderately, with labor market improvements. However, Narayana Kocherlakota dissented, advocating for continued asset purchases and a commitment to low rates until inflation stabilizes.

What was the main reason cited by the Fed for policy changes?

• Decrease in unemployment benefits

• Increase in inflation

• Improvement in the labor market

• Rise in stock market prices

What does the Fed's new language on inflation suggest?

• Inflation is expected to rise significantly

• Inflation is expected to decrease further

• Inflation is running too low

• Inflation is stable and not a concern

What might cause the Fed to increase the federal funds rate sooner than anticipated?

• Faster progress towards employment and inflation objectives

• A decrease in employment

• A decline in stock market performance

• A rise in energy prices

What is the current state of economic activity according to the Fed?

• Expanding at a moderate pace

• Declining

• Stagnant

• Booming

Why did Narayana Kocherlakota dissent from the Fed's decision?

• He disagrees with the Fed's assessment of the labor market

• He believes inflation is too high

• He wants to increase the federal funds rate immediately

• He thinks the inflation outlook is sluggish and the target range should be maintained