Bernanke Says Bond Tapering to Start This Year

Federal Reserve Chairman Ben Bernanke said on Wednesday the U.S. central bank still expects to start scaling back its massive asset purchase program later this year, but left open the option of changing that plan in either direction if the economic outlook shifted.

While sticking closely to a time line he first outlined last month that the Fed would halt bond buying by mid-2014, when unemployment was projected to be around 7 percent, Bernanke went out of his way to stress that nothing was set in stone.

“Our asset purchases depend on economic and financial developments, but they are by no means on a preset course,” he told the U.S. House of Representatives Financial Services Committee in prepared remarks.

Bernanke’s semi-annual statement to Congress, which may be his last if the chairman steps down when his term ends in January, as many expect, will be followed by a lengthy question and answer session with the committee’s members.

Bernanke said the pace of asset purchases could be reduced “somewhat more quickly” if economic conditions were to improve faster than expected. On the other hand, the current $85 billion monthly pace “could be maintained for longer” if the labor market outlook darkened, or inflation did not look like it was rising back toward the Fed’s 2 percent goal.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza
Alfonso Esparza

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