Fed Ends QE3 As Jobs Market Continues To Improve

(RTTNews) - As expected, the Federal Reserve on Wednesday announced its final round of quantitative easing, slashing purchases of Treasurys and mortgage-back securities to zero from $15 billion.

Policy makers repeated their pledge to keep interest rates around their record lows for "a considerable time," but said interest rates may rise sooner than markets expect if the economic recovery continues to gather steam.

The Fed ended its so-called QE3 program after US unemployment rate dipped to 5.9 percent in September, a six-year low.

"A range of labor market indicators suggests that underutilization of labor resources is gradually diminishing," the Fed said in a change in language that previously warned about persistent slack in the labor market.

Policy makers also sounded more hawkish on inflation despite a significant recent drop in prices at the pump.

"Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year," the Fed's policy statement explained.

There was no mention of economic headwinds facing Europe and the possibility of a Chinese slowdown.

The vote to end QE was 9-1, with Minneapolis Fed President Narayana Kocherlakota dissenting on grounds that QE3 should have been sustained.