Federal Reserve taper still unclear
Tapering of the Federal Reserve’s economic stimulus usually begins in September, but the instability of the economy and concerns over recovery has led to a delay.
Scheduling the tapering of the $85 billion-a-month bond-buying programme does not appear to be any time soon, with the Federal Reserve stating that they would be maintaining the economic stimulus without suggesting when this will occur. This could mean that the first tapering may not start until early 2014.
The Federal Open Market Committee said that it “sees the improvement in economic activity and labour market conditions since it began its asset purchase programme as consistent with growing underlying strength in the broader economy”. Any move with regard to the Fed’s economic stimulus could serious affect the economic recovery of the US, and so caution is paramount.
The US has not yet completely absorbed the full impact of the two week Government shutdown; despite sustaining moderate economic growth this month, national jobs data showed a slowing of job creation with only 130,000 jobs added in October. The Federal Reserve are likely to adjust their pace purchasing in accordance with economic progress, but further evidence is required to ensure that recovery will not be significantly affected by the shutdown.