"It's a shot heard round the world for global investors -- a reminder that QE is in fact going to end one day"
-Chris Rupkey, the chief financial economist for Bank of Tokyo-Mitsubishi UFJ Ltd
The Federal Reserve is widely expected to start trimming its asset-purchase programme, also known as quantitative easing, to $65 billion already in September, and announce an end of buying in June 2014, the plurality of estimates from economists is suggesting. A survey was conducted soon after the Fed's President Ben Bernanke latest press conference, where he signalled a timetable for ending one of the most aggressive stimulus measures in the Fed's history. Economists now predict a faster reduction in bond-buying from current $85 billion a month: 44% are expecting a tapering in September, compared with 27% in the previous survey conducted in the beginning of June.
Also this week Federal Reserve Bank of St. Louis President James Bullard expressed his concerns that Bernanke has chosen an inappropriate time for announcing a possible tapering of QE. Bullard is now dissented from Bernanke's statement, saying policy makers should introduce more actions to signal they are determined to reach their inflation goal in light of weak growth of consumer prices. According to Bullard, it is a mistake to make such important announcements in the same day with marking down projections of economic growth and inflation for this year.
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