Market Expects $10 Billion Taper on Bernanke’s Farewell

January 29, 2014 Share Print 0

Turmoil in emerging markets and a month of disappointing job growth at home are unlikely to deter the Federal Reserve from trimming its bond-buying stimulus on Wednesday, as Ben Bernanke wraps up his last policy meeting at the helm of the U.S. central bank.
Overall signs of improvement in the economy suggest Fed officials will stay on track to cut monthly purchases of Treasurys and mortgage-backed securities by $5 billion each, bringing the total of their monthly asset purchases to $65 billion.

The meeting is Bernanke’s last before Vice Chair Janet Yellen moves into the top spot.

Bernanke took the Fed far into uncharted territory during his eight years on the job, building a $4 trillion balance sheet and keeping interest rates near zero for more than five years to pull the economy from its worst downturn in decades.

With those efforts beginning to pay off—and concerns growing over possible harm from so much money printing—the Fed announced plans last month to phase out the bond buying by late this year unless the economy takes a decided turn for the worse.

It started by trimming its monthly purchases to $75 billion from $85 billion, and on Wednesday, the central bank is expected to shave another $10 billion.

via Fed poised for $10 billion taper as Bernanke bids adieu

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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.