Fed Announces A Start To Modestly Reducing Its Bond Holdings

WASHINGTON (AP) — The Federal Reserve will begin shrinking the enormous portfolio of bonds it amassed after the 2008 financial crisis to try to sustain a frail economy. The move reflects a strengthened economy and could mean higher rates on mortgages and other loans over time. The Fed announced Wednesday that it will let a small portion of its $4.5 trillion balance sheet mature without being replaced, starting in October with reductions of $10 billion a month and gradually rising over the next year to $50 billion a month. The central bank left its key short-term rate unchanged but hinted at one more rate hike this year — most likely in December — if persistently low inflation rebounds.

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