Trader Fred DeMarco, right, works on the floor of the New York Stock Exchange, as a television screen shows the decision of the Federal Reserve on Oct. 29, 2014.WASHINGTON – The Federal Reserve cited an improving economy Wednesday as it ended its landmark bond-buying program and pointed to gains in the job market – a key condition for an eventual interest rate hike.
The Fed did reiterate its plan to maintain its benchmark short-term rate near zero “for a considerable time.” Most economists predict it won’t raise that rate, which affects many consumer and business loans, before mid-2015.
But in a statement ending a policy meeting Wednesday, the Fed noted that the job market is strengthening. Its statement drops a previous reference to “significant” in referring to an “underutilization” of available workers.
Instead, the Fed said the excess of would-be job holders is “gradually diminishing.” It also noted solid hiring gains and a lower unemployment rate, now 5.9 percent. One of the Fed’s major goals is to achieve maximum employment, which it defines as an unemployment rate between 5.2 percent and 5.5 percent.
That all suggested that the Fed is looking toward an eventual rate hike.