The Federal Reserve said Wednesday that the U.S. economy is strong enough for the central bank to begin reducing its $4.5 trillion balance sheet in October, gradually unwinding a massive stimulus program started after the economy entered a severe recession nearly a decade ago.
The Fed will start reducing its holdings by $10 billion in October and raising that amount gradually in the months to come.
“The basic message here is U.S. economic performance has been good,” said Federal Reserve Board Chair Janet L. Yellen on Wednesday.
The U.S. economy keeps getting better, according to the central bank. Hiring is strong, consumers continue to spend and business investment is “picking up,” the Fed said. It now projects 2.4 percent growth this year, far higher than last year.
After the 2008 financial crisis and ensuing recession, the Fed took the unprecedented step of beefing up its holdings of government bonds and mortgage-related securities from $900 billion to $4.5 trillion in an effort to turn the …