From the WSJ
''Federal Reserve officials on Wednesday upgraded their assessment of the economic recovery and Chairman Ben Bernanke said the central bank could begin pulling back its $85 billion-per-month bond-buying program later this year.
"Labor market conditions have shown further improvement in recent months," the Fed said in its formal policy statement, though it noted that unemployment remains "elevated." Fed officials also noted that they see "the downside risks to the oulook for the economy and the labor market as having diminished since the fall."
But Mr. Bernanke made clear at the outset of his press conference that he and other officials believe the economy is on a better path. He said the program of bond buying could be completed by the middle of next year as the jobless rate reaches a projected 7%.
Despite its upbeat view of the economy, the Fed gave a slight nod to recent soft inflation readings, saying that "inflation has been running below" the central bank's 2% target, although it added that "[l]onger-term inflation expectations have remained stable."
However, he said a wind-down would be contingent on the steady growth the Fed has been seeing and said there is no trigger for a reduction in purchases. He also said the Fed could ramp up its buying, even after cutting, if conditions warrant. "Our policy is in no way predetermined," he said, noting that the Fed might decide to shift from this plan if the economy doesn't measure up to the Fed's expectations.
The Fed's more optimistic view of the economy was also reflected in its revised economic projections, which were also released Wednesday. Fed officials saw unemployment falling slightly faster and hitting lower than they did in their previous forecasts, from March. For instance, by the end of 2014, they see the jobless rate hitting between 6.5% and 6.8%, an improvement from March when they saw it hitting between 6.7% and 7% by then. At the end of last year, the forecast was 6.8% to 7.3%.
Despite the lower expected unemployment rate, Fed officials still expect to keep short-term interest rates low until 2015, their projections showed. Fourteen Fed officials said they didn't expect to start raising rates until 2015, compared to 13 who said so in March''.
