Fed tapering of QE expected to be on the cards

Julian Harris
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US FEDERAL Reserve chief Ben Bernanke is expected to discuss the possibility of tapering its mass asset-purchasing stimulus programme at a policy meeting today.

Bernanke and his fellow voting members of the Federal Open Market Committee (FOMC) are believed to want to signal a possible slowdown in the latest bout of quantitative easing, so long as the US recovery shows signs of strength.

The FOMC is meeting today and tomorrow, after which Bernanke will hold the usual monthly news conference, with investors closely monitoring signs of the brakes being applied to Fed stimulus.

The Fed is currently buying up $85bn in bonds each month.

While keen that the purchases do not become imbedded in market expectations, Bernanke and many of his colleagues are wary of startling the markets by pointing to a more hawkish direction.

Societe Generale analyst Benoit Anne last night said he expects Bernanke to again indicate that tapering is a possibility.