After the message route cuts QE3, stocks, bonds and commodities on world prices, U.S. only increase.
It is predicted by most economists in a Bloomberg News survey last week. Economists also predict quantitative easing 3 will end in June next year.
Bloomberg Survey of 54 economists conducted on 19-20/6, after the press conference by Fed Chairman Ben S.Bernanke, when he refers to the termination of quantitative easing, the largest in history use of the Fed. There were 44% of economists surveyed identified a reduction from September, 22% higher than in the previous survey two weeks.
"This is important information for global investors, a reminder that QE3 program will end someday," said Chris Rupkey, chief economist of Bank of Tokyo-Mitsubishi UFJ in New York. "What makes investors feel more relieved to make sure that the unemployment rate will fall faster." The unemployment rate in May was 7.6%.
Earlier, during the meeting of the Open Market Committee (FOMC) of the Fed, Mr. Bernanke said the Fed will likely start cutting bond buying program this year and ending in mid-next year, when the economy achieve economic goals that Fed proposed certain. Bernanke's speech has caused a sell-off on global financial markets, with falling stock prices and bond yields higher.
Fed President James Bullard of St. Louis, who does not endorse QE3 cut in the Fed's meeting, said officials had decided to schedule the reduced rate easing program is not an appropriate way .
"The approach is more prudent to wait for tangible signs that the economy is growing faster and inflation is on the way back to the goals set out, before announcing such plans", Mr. Bullard comments.
15% of economists surveyed by Bloomberg said that the Fed will start decreasing QE3 program in October and 28% said that policy makers will wait until December. The remaining 13% said that the Fed will not start buying bonds decelerate until at least next year.
Plan of the policy is to gradually reduce the program when the economy is showing signs of full recovery. Fed officials predicted will grow at 2.6% this year and 3.5% in 2014.
Forecast of Central Bank on economic growth are more optimistic than Wall Street. Economists in a Bloomberg survey forecast average growth of 1.9% this year and 2.7% next year.
If the economic data consistent with the Fed's forecast, "the Commission said that would be appropriate to regulate the pace of buying at the end of this year," Bernanke said at a press conference last midweek. "We will continue to buy bonds decelerate during the first half of next year, and ended up in the middle of the year."
The impact of the reduction largely reflected in the prices of financial assets, said Jonathan Wright, a professor of economics at Johns Hopkins University in Baltimore, who worked at the Fed's monetary unit since 2004 to 2008 comments.
"The Fed QE3 will be reduced by the end of this year and tightening financial conditions at the time this is a risky strategy as the economy gained only a little growth," he said.
America's central bank has started the third round of asset buying program scale from September last year, with $ 40 billion in buying mortgage securities in the first month. Fed has continued the program in December to buy 45 billion in Treasury bonds.
The reduction in economic stimulus and financial balance without stirring the market is one of the biggest challenges for his successor Bernanke will face. Fed Vice Chairman Janet Yellen as many bright candidates to replace Mr. Bernanke when his term ends in January 1/2014, according to economists surveyed. Economists said that Yellen has 65% chance to win the top position at the central bank.
Former Treasury Secretary Timothy F. Geithner also be given a 10% chance of Obama and former adviser, Lawrence Summers, Treasury Secretary under President Bill Clinton, also predicted the 9% capacity.
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