Fed to shrink assets next month, boost rates by year end

(Sept 21): The Federal Reserve moved to dismantle a pillar of crisis-era support for the world’s biggest economy and stuck with its forecast to raise interest rates again this year, saying hurricane damage won’t derail an otherwise healthy expansion.

“Hurricanes Harvey, Irma and Maria have devastated many communities, inflicting severe hardship,” the Federal Open Market Committee said in its statement on Wednesday following a two-day meeting in Washington. “Storm-related disruptions and rebuilding will affect economic activity in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term.”

In the statement, the Fed set October for the start of their previously announced plan to shrink its US$4.5 trillion ($6.05 trillion) balance sheet. As expected, policy makers left the benchmark interest rate unchanged in a range of 1% to 1.25%.

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