As Federal Reserve Chairman Ben S. Bernanke shuts the door to his office for a final time in two days, he can say he took actions that were the first or the biggest of their kind in the central bank’s 100-year history. Some will probably also be the last.
The Federal Reserve will stick to its plan for a gradual reduction in bond purchases, economists said after a government report showed that U.S. employment rose at the slowest pace in three years in December.
Cutting back the Federal Reserve’s unprecedented monthly bond purchases is “firmly on the table” to get underway before a new chairman takes over in January, said Vincent Reinhart, chief U.S. economist for Morgan Stanley in New York.
The Federal Reserve will resume its bond purchases at some point in a strategy known as quantitative easing to bolster the economy because it wants to maintain credibility, said Vincent Reinhart , a former monetary affairs director at the U.S. central bank.
Odds are about 50 percent that the Federal Reserve will buy additional assets to keep its balance sheet stable and stimulate a slowing U.S. economy, said Vincent Reinhart , a former director of monetary affairs at the Fed.
Federal Reserve Chairman Ben S. Bernanke should assure investors next week that “he’ll do whatever it takes” to stimulate the slowing economy, said Vincent Reinhart, chief U.S. economist at Morgan Stanley.