WASHINGTON (9/17/14 UPDATED 2:27 p.m. ET)--The Federal Open Market Committee (FOMC) said in today's policy statement that quantitative easing (QE), a tool the Fed has used to stimulate the economy since the economic downturn in 2008, likely will be entirely phased out next month.
In a statement released at the conclusion of the FOMC's most recent two-day meeting, the Fed said that it would drop its asset-purchasing program to $15 billion beginning in October.
"If incoming information broadly supports the committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the committee will end its current program of asset purchases at its next meeting," the statement said.
At that point, the spotlight will fall squarely on when the FOMC will begin raising interest rates.
In today's statement, the Fed maintained that if projected inflation continues to run below the committee's 2% longer-run goal, it will keep rates near zero for a considerable time after the QE asset-purchase program ends.
"When the committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2%," the committee wrote in its statement.
"The committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the committee views as normal in the longer run," the FOMC said.