Arab Today, arab today jittery markets await clarity from the fed
Last Updated : GMT 05:45:26
Arab Today, arab today
Arab Today, arab today

Jittery markets await clarity from the Fed

Arab Today, arab today

Arab Today, arab today Jittery markets await clarity from the Fed

Washington - AFP

The Federal Reserve\'s policy board meets Tuesday to review the economy and its stimulus program, and markets are looking for one thing: clarity. After weeks of tumultuous stock market volatility and a sharp fall in bond prices, bankers, investors and anyone else with a vested interest are waiting to hear: is the Fed really about to reel in its quantitative easing program? If so, could that be within months? Or will the US central bank wait for stronger economic growth to take that step? The markets eagerly await any meeting of the Federal Open Market Committee, which sets the benchmark US dollar interest rate and, at the moment, continues to hold long-term rates down with its $85 billion-a-month QE bond buying program. But much more rides on this FOMC meeting Tuesday and Wednesday, because over the past month billions of dollars have been bet on an aggressive interpretation of comments by Fed chief Ben Bernanke that the Fed is about to turn the corner on five years of stimulus. The belief that it will start tapering its bond purchases within months has sent bond prices plummeting and interest rates shooting up, and that, in turn, has pulled stocks lower, after they reached new records fueled by the Fed\'s easy money policy. Yet US economic growth slowed slightly in the spring and remains at risk to slower growth around the world, and with the government slashing spending, Fed stimulus is still needed, economists say. The Fed\'s guideposts, unemployment and inflation, remain far off their target for a \"normalized\" fiscal policy. The unemployment rate is hovering at 7.6 percent -- the target is 6.5 percent -- and inflation is well below the 2.0 percent level the FOMC sees would be healthy. Most analysts say that means that the FOMC is likely to stay the course in this meeting. But how Bernanke hones his hints on future policy in a post-meeting press conference Wednesday will be key. \"We do not expect Mr. Bernanke to yet show confidence that the time to taper QE is near,\" said Carl Riccadonna at Deutsche Bank. \"But the most important aspect of his media Q&A will be whether he signals that a second-half taper remains plausible.\" The bond market has decided. The yield on the 10-year Treasury bond shot up from 1.63 percent at the beginning of May to 2.23 percent in the past week, and the 30-year jumped from 2.82 percent to 3.38 percent. Partly behind that were the seeming at-odds comments by Bernanke to Congress on the issue on May 22. He first warned that tightening monetary policy now could stall the US recovery. But moments later he said the Fed could decide to start reining in stimulus in its \"next few meetings,\" taken as meaning as within months. Since then stock markets have swung wildly from day to day as investors hang on every economic data point to confirm or weaken the interpretation that cutting QE is nigh. Yet Bernanke has been at pains to stress that the tapering QE purchases would begin only if the economic data supports a picture of a consistently improving economy. And the Fed has not yet concluded that, with US industry and employment still growing slowly. Still, there are reasons for nervousness. Many investors fear a repeat of February 1994. Likewise a time of a tepid turnaround from recession, and with no evidence of inflationary pressures, the Fed without warning raised its benchmark federal funds rate for the first time in five years, and did so repeately over the next 10 months for a rate hike totalling a massive 2.5 percentage points. It came as a huge shock to the bond and stock markets, and criticism rained over the Fed. Two decades later, the conditions are similar. But the Fed has clearly taken to heart the lessons with its expanding emphasis on \"communications\" -- on flagging the evolution of its thinking to the public in a regular and consistent way so there are no surprises. \"The Fed will not slow its bond buying at the upcoming meeting. But Ben Bernanke has an opportunity to clarify for markets that, even if the Fed tapers later this year, interest rate hikes are still far in the future,\" said economist Paul Edelstein at IHS Global Insight. Analysts at Wells Fargo said the low inflation rate means the Fed does not have to move yet. \"While we expect inflation to rise over the remainder of the year, it will likely remain securely below the Fed\'s two percent target and could sway the Fed to wait until late this year to begin tapering.\"

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today jittery markets await clarity from the fed Arab Today, arab today jittery markets await clarity from the fed

 



Arab Today, arab today
Arab Today, arab today Mohamed Bahari prepares new collection for spring 2017

GMT 06:15 2017 Monday ,27 February

Mohamed Bahari prepares new collection for spring 2017
Arab Today, arab today 17.4 million tourists visit UAE in 2016

GMT 00:47 2017 Monday ,27 February

17.4 million tourists visit UAE in 2016
Arab Today, arab today Sheds light on major steps in 12-year career

GMT 06:07 2017 Monday ,27 February

Sheds light on major steps in 12-year career
Arab Today, arab today UN envoy sets out framework

GMT 07:25 2017 Monday ,27 February

UN envoy sets out framework
Arab Today, arab today Ayat Abaza says state TV presented major stars

GMT 03:52 2017 Sunday ,26 February

Ayat Abaza says state TV presented major stars

GMT 05:14 2017 Monday ,27 February

New Saudi stock market opens with gains of 20%

GMT 15:57 2017 Sunday ,26 February

Ooredoo Posts 4 Pct Increase in Net Profit in 2016

GMT 15:41 2017 Sunday ,26 February

Ooredoo Posts 4 Pct Increase in Net Profit in 2016

GMT 14:44 2017 Sunday ,26 February

Muscat shares fall on local selling

GMT 06:44 2017 Sunday ,26 February

Doubts grow over American stock market’s surge

GMT 06:26 2017 Sunday ,26 February

Copper recovers lost ground

GMT 15:53 2017 Saturday ,25 February

Bahrain Bourse daily trading report
View News in Arabic - Business: أسواق مالية
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Penguins in the age of dinos

GMT 11:44 2017 Saturday ,25 February

Penguins in the age of dinos
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today 'Constructive' Vauxhall talk with union

GMT 08:54 2017 Saturday ,25 February

'Constructive' Vauxhall talk with union
Arab Today, arab today Tesla back into red but revenue grows

GMT 07:27 2017 Thursday ,23 February

Tesla back into red but revenue grows
Arab Today, arab today Reasons for the delay 'On the Stairs of Servants'

GMT 06:42 2017 Saturday ,25 February

Reasons for the delay 'On the Stairs of Servants'
Arab Today, arab today Ex-yoga missionary unleashes rage

GMT 12:16 2017 Thursday ,23 February

Ex-yoga missionary unleashes rage

GMT 07:23 2017 Friday ,24 February

Ola Ghanem hopes to work with M.Ramadan

GMT 05:14 2017 Thursday ,23 February

UK appoints 1st Scotland Yard chief in 188 years

GMT 18:23 2017 Friday ,24 February

Fadi explains secrets of  Nancy Ajram's newlook

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries

GMT 19:45 2017 Monday ,20 February

Sarah Belamesh designs antiques of "ceramic"

GMT 10:51 2017 Saturday ,25 February

Pigs with edited genes show resistance

GMT 14:04 2017 Friday ,24 February

Messi visit will contribute in tourism

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 01:04 2017 Tuesday ,28 February

Nokia 3310 is back — and so is 'Snake'

GMT 22:42 2017 Thursday ,23 February

Nasima Gamei revives heritage in jewelries
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday