US Federal Reserve pulls back on stimulus effort

The US Federal Reserve has announced a slowdown in its effort to boost the US economy.

The central bank said it planned to scale back its $85bn (£51.8bn) a month bond buying programme by $10bn a month.

Stimulus of this kind is designed to lower interest rates and boost economic activity

The Fed's governing committee cited stronger job growth as a reason for the decision to begin winding down its programme of bond buying.

The announcement followed a two-day meeting in Washington DC.
The Fed's decision to begin to ease its extraordinary stimulus efforts also indicates that the central bank believes that the US economy has finally strengthened enough that it no longer needs as much support.

In its forecast for the coming years, the Fed said the employment situation will improve faster than previously expected.

It said the unemployment rate will fall to 6.3% in 2014 from its current level of 7%.

This could set the pace for further reductions in the Fed's stimulus efforts in the coming year.

In a press conference to discuss the Fed's announcement, Chairman Ben Bernanke said: "If incoming data broadly support the committee's support for employment we will likely reduce the pace of committee's purchases in further steps at future meetings."