The Federal Reserve’s big day is finally here. Expectations that the central bank will announce a $10-$20 billion reduction in its monthly asset purchases are running high, but what if Chairman Ben Bernanke gets cold feet?
Such a decision would spark a bout of volatility in financial markets, highly undesirable given the fragile state of the recovery in the world’s largest economy, market watchers say.
“Knowing that investors have waited with bated breath for this month’s [Federal Open Market Committee] meeting, team Bernanke knows that if they fail to manage the market’s expectations properly, they risk triggering a sharp rise in volatility… that could end up threatening the overall recovery,” said Kathy Lien, managing director at BK Asset Management.
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