According to a report from the Wall Street Journal,"a reduction in the program to $65 billion a month from the current $75 billion could be announced at the end of the Jan. 28-29 meeting, which would be the last meeting for outgoing Chairman Ben Bernanke".
"'Mr. Bernanke suggested at a December news conference that officials were inclined to continue cutting purchases in $10 billion increments at subsequent meetings as long as the economy keeps strengthening".
"We're likely to continue on a path of gradual, measured reductions in the pace of purchases, assuming the economy tracks as we expect it to," San Francisco Fed President John Williams said in an interview early in the month.
In December, the Fed said rates would remain near zero "well past" the time when the unemployment rate falls to 6.5%. The Fed is in no hurry to raise interest rates. But because officials have tied their plans to movements in the jobless rate, they see a need to better explain their plans as the jobless rate drops.
The Labor Department reported employers added just 74,000 jobs in December, a slowdown from average gains of 214,000 during the four previous months. Many Fed officials doubt the economy is as weak as the December report suggested. The data may have been distorted by bad weather or normal statistical variation. Many other indicators suggest the recovery picked up strength during the second half of 2013, driven in part by stronger consumer spending and improved trade.
After struggling for months last year to produce an exit strategy from the bond buying in the face of pronounced investor anxiety, Fed officials say they are reluctant to shift plans abruptly or without convincing evidence.
Many Fed officials are pleased with how their plan to wind down the program has played out, despite last year's market volatility. Stocks are up, the economy and job market are stronger and signs of froth in some corners of the bond market have diminished.
Mr. Bernanke signaled his rosier outlook in a speech in Philadelphia earlier this month, when he said headwinds to economic growth "may now be abating."
Fed officials are especially heartened by developments in interest-rate futures markets, where investors are betting rate increases won't begin until 2015, in line with what policy makers are currently expecting. The Fed spent months last year trying to convince investors the end of the bond-buying program didn't presage an imminent Fed campaign to raise short-term interest rates.
The jobless rate is declining much faster than the Fed expected—hitting 6.7% in December. It is falling in part because people are leaving the labor force, reducing the ranks of those counted as unemployed. Yet this could be interpreted in different ways. The decline in the share of adults participating in the labor force might reflect weakness in the economy—a reason for Fed officials not to rush into raising interest rates. It could also signal that slack in the economy—in this case, people searching for jobs—is diminishing, which could cause inflationary pressure that would merit higher rates.
In addition to saying in December that rates would stay low "well past" a 6.5% jobless rate, they have said they are comfortable keeping rates near zero "especially" if inflation remains below 2%. They have also said rates would stay near zero for a "considerable" period after the bond-buying program ends, which at its current pace won't happen until late this year.
