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Fed ponders stimulus wind-down timetable


Fed ponders stimulus wind-down timetable


The US Federal Reserve’s two-day policy meeting for September started on Tuesday, and top of the agenda was a reduction of its stimulus measures.

The Fed will have to tread carefully in outlining how it plans to cut the monthly purchases of bonds – which are a way of pumping money into the US economy.

Just the suggestion of a reduction from Fed Chairman Ben Bernanke back in May caused huge sell-offs in global financial markets.

Economists generally expect a cut back in bond purchases from $85 billion a month to $75 billion.

Fed officials may try to reduce the impact of that cut by stressing buying will continue well into next year and that interest rates will not be raised any time soon.

Among the data that the Fed policy makers will be considering, US consumer prices.

They barely rose in August as the cost of energy fell, but an increase in
rents and medical care costs pointed to a stabilisation in underlying inflation that could allow the Federal Reserve to start trimming its bond purchases.

The US Labor Department said on Tuesday its Consumer Price Index edged up 0.1 percent in August after rising 0.2 percent in July.

In the 12 months through August, the increase in the CPI slowed to 1.5 percent after advancing 2.0 percent in July.

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