Fed keeps cutting stimulus at Bernanke's last meeting

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Fed keeps cutting stimulus at Bernanke's last meeting

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The US Federal Reserve is continuing with its stimulus reduction, despite recent turmoil in emerging markets.

Meeting for the last time under the leadership of outgoing Chairman Ben Bernanke, Fed policymakers announced a further $10 billion reduction in the monthly purchases of bonds.

That is the US central bank’s way of pumping money into the world’s largest economy.

Starting in February, the Fed will buy $65 billion in bonds per month, down from $75 billion now. It shaved its purchases of US Treasuries and mortgage bonds equally.

Vice Chair Janet Yellen – who takes over from Bernanke on Friday – is not expected to make major changes to the Fed’s efforts, which include reducing the bond buying in “measured” steps and keeping interest rates low until well after unemployment falls below 6.5 percent of the workforce.

In a statement after the two-day meeting the Fed acknowledged that US economic activity picked up in recent quarters.

Consumer spending and confidence has been largely upbeat while industrial production has increased.

A selloff in emerging market currencies and stocks in recent days, and disappointing US job growth in December, did not deter Fed officials.