WASHINGTON — In its final major decision under the leadership of Ben S. Bernanke, the Federal Reserve said Wednesday that it would continue to slowly dismantle its stimulus campaign, citing “growing underlying strength in the broader economy.”
The Fed’s policy making committee voted unanimously to pare monthly bond purchases by another $10 billion — its first unanimous vote since 2011 — despite lingering concerns about the health of the US economy and growing signs that the Fed’s retreat is causing problems in emerging markets including Turkey.
The decision reflected the optimism of Fed officials that the domestic economy is finally poised for faster growth after years of false starts and setbacks. It allows Bernanke, the Fed chairman since 2006, who once hoped to oversee the end of the central bank’s stimulus campaign, to step down Friday having at least directed the first steps.
Looking ahead, Bernanke also leaves a clear road map pointing toward an end of the Fed’s bond purchases in October or December. His successor, Janet L. Yellen, has supported that plan as the Fed’s vice chairwoman. She is likely to give the first indication of her own views when she testifies before Congress next month.
Stock indexes fell Wednesday as the Fed’s retreat rippled through global markets, driving money toward less risky investments like Treasury securities. The broad Standard & Poor’s 500 stock index fell 1 percent to close at 1,774.20, while the price of the benchmark 10-year Treasury note hit a two-month high.
Bernanke leaves a road map pointing to an end of the bond purchases in October or December.
The Fed’s retreat is producing a global shift in investment patterns as investors who chased higher returns in foreign markets are beginning to anticipate the return of higher interest rates in the United States. That is causing problems in countries like Turkey that depend heavily on foreign investment.
Fed officials are unlikely to adjust policy in response to the foreign turmoil.
The Fed expanded its holdings of Treasury and mortgage-backed securities by $85 billion each month in 2013 in an effort to spur job creation and drive down unemployment. In December the Fed announced that it would cut the volume to $75 billion in January. It said Wednesday that it would further reduce the volume of purchases to $65 billion in February: $30 billion of mortgage bonds, $35 billion of Treasurys. It also said it was “likely” to continue the retreat, setting the table for another $10 billion cut at the next meeting of the Fed’s policy committee in March.