Tinker, Taper; America's Monetary Policy  

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Jenis: Article from Bulletin/Magazine
Dalam koleksi: The Economist (http://search.proquest.com/) vol. 407 no. 8841 (Jun. 2013), page 65-66.
Topik: Monetary Policy; Economic Conditions; Bond Markets; Interest Rates; Statistical Data

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Since the Federal Reserve's main policy interest rate fell to near zero in December 2008 it has deployed a complex array of "unconventional policies" to boost the economy. The Federal Open Market Committee this week ostensibly kept its foot on the gas. It promised to keep adding $85 billion in bonds per month to a stash that has almost quadrupled to $3.4 trillion since the beginning of the recession. It also pledged to keep short-term interest rates near zero. Bond markets are more preoccupied by what lies in the future. Since late April the yield on ten-year Treasury bonds has leapt to more than 2.3% from 1.7%. Mortgage rates have also jumped. At a press conference this week Fed chairman Ben Bernanke a "tapering" of the pace of asset purchases could get under way later this year. Fed officials are doubtless annoyed by the market's skittish reaction to the idea of tapering. vents of the past month have raised the stakes. The market gyrations show that investors are reaching for returns amid low rates. Junk-bond mutual funds have been battered in recent weeks as investors temporarily abandoned their quest for yield. Yet the reaction touched off by the mere hint of less quantitative easing (QE) also underlines the risks of withdrawing stimulus prematurely.

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