"I think, in any event for us, the process of exit is a welcome transition to a more normal global monetary policy conditions"
- Luiz Awazu Pereira da Silva, deputy governor of the Banco Central do Brasil
An annual symposium at Jackson Hole was ended in Saturday, with Federal Reserve officials standing on track to start scaling back one of the most massive economic stimulus programme, but remained indecisive about the timing of the move. At the conference some Fed policy makers argued that the nation's current economic growth may be sustainable enough to begin tapering sooner rather than later, highlighting that while earlier rounds of asset purchases bolstered the economy and financial system, QE is now of limited benefit. They are concerned that extended bond buying scheme could start to destabilize financial markets and sow seeds of high inflation. In contrast, weak new home sales data dimmed the outlook, as purchases of new U.S. homes fell 13.4% in July, the most in more than three years, increasing concerns higher mortgage rates will hamper the real-estate rebound and reinforcing the view of the majority of Fed officials, who believe that thorough assessment of economic data is required before deciding on QE tapering.
Moreover, it is widely believed that Fed's trimming of bond buying will hurt developed economies from India to Turkey by sparking outflow of cash, accompanying falls in exchange rates and higher borrowing costs. Nevertheless, the majority view among officials at Jackson Hole was there is more pain to come, but emerging economies will survive it.
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