Fed Expects to Stop Bond Buying in October

The Federal Reserve continues to reduce its asset purchases.

Jul 9, 2014 at 4:26PM

The Federal Reserve Open Market Committee released (link opens as PDF) its latest meeting minutes today, revealing the expected end of its bond-buying era.

During its June 17-18 meeting, the FOMC decided, barring any economic surprises, to complete its bond-buying program in October 2014: "If the economy progresses about as the Committee expects, warranting reductions in the pace of purchases at each upcoming meeting, this final reduction would occur following the October meeting."

The Fed has been tapering its Treasury bonds and mortgage-backed securities purchases -- collectively known as "quantitative easing" or "QE" -- since January, but today's publicized meeting minutes are the first time a definitive date has been aired to investors, analysts, and the general public.

With an end date of October in sight, the Fed was also quick to reassure investors that the federal funds target rate won't be changing as soon. Currently set between 0.0% and 0.25%, the federal funds rate is the interest rate at which large financial institutions lend and borrow money from their balances with the Federal Reserve, which affects the interest rates for all loans. By keeping the federal funds rate low, the Federal Reserve aims to promote borrowing money and discourage saving it, a recipe for increased economic activity.

The Fed noted that any change in the target range would "depend on its assessment of actual and expected progress toward its objectives of maximum employment and 2 percent inflation," and that it "likely would be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends."

For investors, today's news carries no surprises, and the explicit reassurance from the FOMC serves as yet another signal that Federal Reserve Chair Janet Yellen won't be pulling any surprises on Mr. Market. For the moment, Uncle Sam's continued retreat from market interventions continues at a slow, steady, and predictable pace.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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