Washington: Turmoil in emerging markets and a month of disappointing job growth in the United States re unlikely to deter the US Federal Reserve from trimming its bond-buying stimulus on Wednesday, as Ben Bernanke wraps up his last policy meeting at the helm of the US central bank.
The meeting is Dr Bernanke’s last before vice-chair Janet Yellen moves into the top spot.
Overall signs of improvement in the US economy suggest Fed officials will stay on track to cut monthly purchases of Treasuries and mortgage-backed securities by $5 billion each, bringing the total of their monthly asset purchases to $65 billion.
It started by trimming its monthly purchases to $75 billion from $85 billion, and on Wednesday, the Fed is expected to shave another $10 billion. “It’s clear the Fed wants to taper,” said Eric Stein of Eaton Vance in Boston.
However, steep losses in emerging market assets over the past week led some to question whether the Fed might put plans to trim its bond buying on hold, but policy makers have given no indication that they would be deterred.
Analysts said the prospect of less Fed stimulus was just one factor contributing to investor jitters, with signs of slower growth in China and political turmoil in countries from Turkey to Thailand playing a bigger role in fueling the emerging market stress. Unless the selling snowballs into a true crisis, few Fed watchers think the US central bank will respond.
