The U.S. Federal Reserve is expected to begin its long retreat from ultra-easy monetary policy on Wednesday by announcing a small reduction in its bond buying, while stressing that interest rates will remain near zero for a long time to come.
Most economists expect the Fed to scale back its monthly purchases by a modest $10 billion, taking them to $75 billion and signaling the beginning of the end to an unprecedented episode of monetary expansion that has been felt worldwide.
Fed Chairman Ben Bernanke, in what is likely his penultimate news conference before stepping down in January, is expected to reinforce the central bank's commitment to keep overnight rates near zero for a long time to come as a way to temper any jitters the bond market may feel.
The forward guidance on rates is aimed at holding down longer-term borrowing costs, which encompass investors' views on the path of short-term rates.
Source: Reuters
