Will the Fed start tapering?

Will the Fed start tapering?

To support a fragile economy, marked by the 2008 crisis, the Federal Reserve decided last year to finance the U.S. economy through a process of injecting liquidity to the U.S. financial system through monthly purchase of 85 billion dollars bonds to maintain low interest rates and a weak dollar.

The Fed chairman, Ben Bernanke announced that the objectives were to reach 6.5 % unemployment rate and 2% inflation. But these purchases have huge consequences on the Fed balance sheet. In October 2013, the balance reached nearly 3.9 trillion dollars. This expensive system pushed investors to speculate on economic indicators that could lead the Fed to start winding down the program, therefore the dollar strength will be sustained.
The latest economic indicators for 2013 are seen as crucial to the monetary policy of the Federal Reserve.

According to the government report, appeared Friday, December 6, the economic growth in Q3 has increased to 3.6 %, US unemployed rate was 7%; about 203,000 jobs were created in November, a first in nearly five years.

Reaching the 7% in the unemployment rate is not symbolic, it is also fast, and Bernanke certainly would not have imagined that this rate can reach this threshold so quickly.

The next statements from FOMC members: Fisher and Bullard will allow us to obtain important information’s on the next policy gathering on December 17-18.

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