Will Bernanke’s exit postpone the taper?
This week, Federal Reserve Chairman Ben Bernanke will be overseeing his last Federal Open Market Committee (FOMC) meeting. Many financial analysts and economic experts are speculating whether the transition from Bernanke to incoming chair Janet Yellen will cause members of the Federal Reserve Board to reconsider tapering its bond-buying program.
The Fed began the taper in December by reducing its purchases by $10 billion. The central bank is expected to make a similar decision this month – spending $35 billion on treasury bonds and $30 billion on mortgage-backed securities. At the Fed's last meeting, Bernanke indicated that the Fed would continue to move at a similar pace in 2014 as it did in late 2013.
"I think the Fed is desperate to extract itself from quantitative easing, and it will continue to scale back the program and end it this year," said Bernard Baumohl, chief global economist of the Economic Outlook Group, to MarketWatch.
He speculated that it would take a major event to push the Federal Reserve off course. This month has already experienced poor jobs numbers and a stock market slump and that has not seemed to phase Bernanke and his colleagues, Baumohl added.
Under the current taper plan, the bond-buying program will be finished by the end of 2014. One finance expert, Jennifer Vail of U.S. Bank Wealth Management, told the source that she expected purchases to be done by September because the bank is ready to "get out."
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