For nearly a year the United States Federal Reserve has been purchasing $85 billion of bonds per month in an attempt to stimulate the U.S. economy.
Since May a topic of much debate has been, when will the Fed begin to reduce (taper) the current programs? ($40B of mortgage backed securities and $45 billion of United States Treasuries) It was during May testimony to Congress that Fed chair, Ben Bernanke, provided clues as to when the Fed might cut the pace of bond buying. He indicated that if there were signs of continuous economic improvement the Fed would considering tapering.
The following short presentation explores some of the reasons the Fed has yet to taper the unconventional bond buying programs and puts today’s economic conditions into perspective.
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