US Fed tapers starts, Ben Bernanke to slash bond purchases by $10 bn, emerging markets on notice

Dec 19 2013, 09:14 IST
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US Federal Reserve Chairman Ben Bernanke smiles as he is asked a question during a news conference at the Federal Reserve in Washington. (AP) US Federal Reserve Chairman Ben Bernanke smiles as he is asked a question during a news conference at the Federal Reserve in Washington. (AP)
SummaryUS Fed actions expected to hit the emerging stock markets hard.

been crippled by the 2008 financial crisis and with staving off what could have been a damaging cycle of deflation.

One policymaker, Eric Rosengren of the Boston Fed, dissented against the decision, which he felt was premature given the still-high unemployment rate.

Bernanke stressed the Fed was not giving up on supporting the economy, and said it would take action if inflation failed to rise to the central bank's 2 percent target. Inflation as measured by the Fed's preferred price gauge rose just 0.7 percent in the 12 months through October.

Even so, recent growth in jobs, retail sales and housing, as well as a fresh budget deal in Congress, had convinced a growing number of economists the Fed would trim the bond purchases.

But many thought the central bank would wait until early in the new year, given persistently low inflation and the fact that the world's largest economy has stumbled several times in its crawl out of the 2007-2009 recession.

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