The world will watch with bated breath as Ben Bernanke, Chairman of the U.S. Federal Reserve, takes to the podium at 2:30 p.m. local time to explain the thinking of the influential Federal Open Markets Committee on whether or not to roll back its $85 billion-a-month monetary policy stimulus, known as quantitative easing (QE).
With the final decision likely to impact global markets and international capital movements over the longer term, many economists were betting that that the Fed would pull back on QE, which has thus far pumped nearly $800 billion into bond markets.
Three months ago, Mr. Bernanke announced that some “tapering” of the policy was likely in 2013 if the economy continued to improve, though the Federal Open Markets Committee’s decision comes on the heels of divergent views within the Fed.
Members of the Board of Governors are split on QE with some said to be “concerned about the unintended consequences of the massive programme,” and others making clear that they desired an “early end” to the policy.
The Fed’s call on tapering also comes after stock markets reacted positively to news earlier this week that the former Treasury Secretary, Larry Summers, had withdrawn from the race to succeed Mr. Bernanke.
Following that development Fed’s Vice-Chairman Janet Yellen is considered the most likely candidate.