US could slow pace of bond buying as early as next month
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Thursday 23 May 2013
Ben Bernanke struck a dovish tone yesterday as he told the US Congress that the Federal Reserve's extraordinary stimulus measures were "providing significant benefits" to the economy, although he said the central bank could "in the next few meetings" begin scaling back its programme of buying $85bn (£57bn) in bonds every month if labour market data showed signs of sustained improvement.
After Mr Bernanke testified, the minutes of the last meeting of the Federal Reserve's policy-setting Open Market Committee underlined the possibility of policy changes, showing that a number of committee members "expressed willingness" to slow the pace of the bond buying "as early as the June meeting" if there was evidence of "sufficiently strong and sustained growth". But members continued to differ on what evidence would be necessary and on the likelihood of that outcome.
"Most participants emphasised that it was important for the committee to be prepared to adjust the pace of its purchases up or down as needed to align the degree of policy accommodation with changes in the outlook for the labour market and inflation," the minutes said.
The US's top central banker was careful to emphasise the risks of too-early a reversal. "A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery," Mr Bernanke told Congress. He said the Fed would only contemplate a pullback if it had confidence that signs of improvement in the economic picture were sustainable.
He was careful not to give too much away, as Wall Street scrutinised his comments to work out when the special measures might be rolled back. "If we do that it would not mean that we are automatically aiming towards a complete wind-down," he said. "Rather, we would be looking beyond that to see how the economy evolves and we could either raise or lower our pace of purchases going forward."
- 1 Stem cells that can kill cancer have been engineered by scientists
- 2 Ricky Gervais and Dame Judi Dench back campaign to stop Thailand dog meat trade
- 3 Russell Brand says he will 'probably' give up acting to focus on his revolution
- 4 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
- 5 Queen's first tweet: Reply telling Her Majesty to 'f*** off' broadcast on BBC News
Stem cells that can kill cancer have been engineered by scientists
Ottawa shooting: 'Sergeant-at-arms shot suspect at point-blank range after diving around pillar'
Russell Brand says he will 'probably' give up acting to focus on his revolution
McKamey Manor: This 'extreme' haunted house is the stuff of nightmares
Jack Bruce dead: Cream bass player dies of liver disease aged 71
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Tony Blair 'says Ed Miliband will lose 2015 general election'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Putin: The US is to blame for almost all the world's major conflicts
Attacks on 'Ukip Calypso' show how skewed people’s priorities are
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...