The U.S. Federal Reserve will take center stage in the coming week with a widely expected cut to its bond-buying stimulus, responding to an improving U.S. economy but also helping fuel a dramatic emerging market sell-off.
(Argentina, Turkey and Ukraine felt the full force last week of a global flight from developing world assets as investors grew concerned about slower growth in China and U.S. monetary tightening, as well as the countries' own problems).
Fed policymakers are expected to confirm the tightening trend during their Jan 28-29 2014 meeting, notably also for being Ben Bernanke's last as chairman before vice chair Janet Yellen takes charge.
They are almost certain to make a second $10 billion cut to the bank's monthly purchase of Treasuries and mortgage-backed securities, from $75 billion now (27 Jan 2014) to $65 billion.
They are also likely to leave intact their delicately worded promise to keep interest rates low, although sharply falling unemployment has left some to doubt how long into the future that promise will hold.
Investors no longer believe the Fed when hear that proper rate tightening would happen much later in the future. Either the Fed will manage to re-establish some credibility on that front, and global emerging markets will probably find some respite in the future, or the global markets are going into a full-blown meltdown.
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