Fed Reserve Decision on Quantitative Easing Anticipated by the Market

By Marc Castro

Jun 15, 2013 12:33 PM EDT

The next word from the Federal Reserve on the continuity of its stimulus plan is heavily anticipated by stock investors from all over the world. It is expected that the US central bank would send out 'soothing words' by next week.

The Federal Reserve will not show its decision on its current bond-buying program but policymakers are inclined to control the recent trading as issues in the financial markets have occurred because of the rumored scale back in its purchases.

Fed Chairman Ben Bernanke's recent pronouncements as to the possibility that the Fed may decide to lower its quantitative easing in the next policy meetings should the economy improve resulted in a stock rally and increase of Treasury bond yields to its latest high in the last 14 months. 

The policy of quantitative easing, which was adopted during the global financial crisis, would have the Federal Reserve purchase Treasury bills and other bonds each month to keep interest rates at low levels in order to promote economic growth.

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