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Bernanke Says Fed on Course to End Asset Buying in 2014



With this signal from the US Federal Reserve, sentiments are probably going to take a hit. As we can see, the EUR/USD is now testing 1.3280. It is widely believed that quantitative easing is one of the main reason for the US equities rally and hence any attempts to reduce or remove it would be met with resistance. Good reading from Bloomberg.

Play Fed Keeps Bond-Buying Pace, Sees Risks Waning Federal Reserve Chairman Ben S. Bernanke said the central bank may start dialing down its unprecedented bond-buying program this year and end it entirely in mid-2014 if the economy finally achieves the sustainable growth the Fed has sought since the recession ended in 2009. The Federal Open Market Committee today left the monthly pace of bond purchases unchanged at $85 billion, while saying that “downside risks to the outlook for the economy and the labor market” have diminished. Policy makers raised their growth forecasts for next year to a range of 3 percent to 3.5 percent and reduced their outlook for unemployment to as low as 6.5 percent. “If the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the pace of purchases later this year,” Bernanke said in a press conference in Washington . If later reports meet the Fed’s expectations, “we will continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year.” Stocks and Treasuries slid as Bernanke’s comments raised the prospect of an end to the quantitative easing that has fueled a rally in financial markets and helped keep the world’s largest economy expanding in the face of federal budget cuts, a slowdown in China and a recession in the euro area. Connecting Dots “The Fed is out of the closet,” said Ward McCarthy , chief financial economist at Jefferies Group LLC in New York and a former Richmond Fed economist. “They expect to end these QE purchases. Bernanke wasn’t more specific than later this year, but connecting all the dots suggests he is thinking in the fourth quarter.” The Standard & Poor’s 500 Index declined 1.4 […]

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  • EUR/USD Gold CorrelationBernanke Says Fed on Course to End Asset Buying in 2014
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