"Every month that passes with inflation stuck below the target, the pressure to come up with a plan to deal with it grows. They are slowly acknowledging that this is a serious risk."
- William Cheney, chief economist at John Hancock Financial Services Inc.
The world's largest economy probably slowed to 3.3% in the final quarter of 2013, from 4.1% in the third quarter. Nevertheless, this is a very impressive figure, taking into account all domestic and global headwinds the U.S. economy was facing. Investors, however, are focusing on a broadly-awaited FOMC meeting– the last under Bernanke's leadership. On Wednesday the Fed can possibly bring another reduction of its stimulus programme, but what is more important, on January 31 Janet Yellen will take over Ben's position.
Analysts claim that tapering plan ensures a smooth handover for Yellen, while she still has a lot of work to do. Her first and main challenge will be to meet the central bank's target of 2% inflation. The last time, the CPI index reached the threshold was in April 2012, and the indicator rose just 0.9% for the 12 months ending in November.
This year FOMC meeting are about to become even more eventful, and therefore, Yellen will have to get other members on her side. As policymakers are not univocal, Janet Yellen's first year as a Fed Chairman can be highly volatile and the changing doubts are introducing uncertainty into financial markets.
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