According to a report from the Wall Street Journal,''the meltdown in emerging-market currencies has added a bit of unwanted drama to Ben Bernanke’s last meeting as chairman of the Federal Reserve''.
Stocks around the world have slumped sharply in recent days. The Dow Jones Industrial Average is riding a five-day losing streak and is off 4.5% for the month; Japan’s Nikkei Stock Average stabilized Tuesday after plunging 5.2% over the previous three sessions; the United Kingdom’s FTSE 100 dropped 4.2% over a five-day skid.
The global rout has prompted some to hope that the Fed might not scale back, or “taper,” the pace of its bond-buying program that was outlined at last month’s meeting.
While that seems unlikely, the debate over what the Fed should do next has put the central bank in a tough spot.
The two-day Fed meeting starts later today and concludes Wednesday with a policy statement and the handoff from Mr. Bernanke to incoming Chairwoman Janet Yellen. She will be tasked with unwinding the Fed’s multi-trillion-dollar stimulus program in delicate fashion without further stirring markets around the globe.
The longer that financial market disruptions persist, the greater the likelihood that the Fed will have to temporarily halt the pace of tapering.
That’s the conundrum the Fed potentially finds itself in.
