With many Federal Reserve officials, including Chairman Ben Bernanke, having raised the prospect of a reduction in the pace of its asset purchase program in coming months, there are signs that financial markets think the Fed is heading to the exit in a hurry and have pushed forward the timing of the first rate hike.
But this is exactly what the Fed doesn’t want to see happen, according to Jon Hilsenrath of the Wall Street Journal.
So Bernanke will use the Fed meeting to try to assuage fears among investors that the bond buying program will end all at once and the Fed will soon raise short-term interest rates, the report said, quoting unnamed “officials.” Bernanke is due to hold a press conference on Wednesday after the latest interest rate decision.
Stocks surged after the report hit the wire right shortly before the market close. Treasury prices extended their gains on the news. Read Market Snapshot.
Bernanke is likely to press home the point that he expects a “considerable” amount of time to pass between ending the bond-buying program and raising short-term rates, the report said.
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