The Federal Reserve is signaling that its $600 billion Treasury bond-buying program will end in June as planned because the economy has strengthened and companies are starting to hire more.
Ending a two-day meeting Wednesday, the Fed made no changes to the program. The decision was unanimous. The bond purchases were intended to lower loan rates, encouraging spending and boost stock prices. But critics worried that the purchases would feed inflation.
The Fed downplayed inflation risks in its statement. It acknowledged a spike in oil prices, but concluded the pickup in inflation will be temporary.
"Inflation has picked up in recent months, but longer-term inflation expectations have remained stable and measures of underlying inflation are still subdued," the Fed said.
It said "the economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually."
As it winds down stimulus, the Fed is now shifting its focus on when and how it should start boosting interest rates to prevent inflation from getting out of control. Economists think the Fed will start raising rates later this year or early next year. Higher rates would reduce borrowing and spending and make companies less inclined to boost prices.
Later Wednesday afternoon, Fed chairman Ben Bernanke is scheduled to hold the central bank's first full-fledged news conference. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.