The atmosphere in the United States maintains the excitement of the worldwide markets as important issues are still in the decision making process.
Recently, the president Barak Obama announced the new chairwoman of the Federal Reserve Bank, the current vicepresidente Janet Yellen. As the mandate of the current chairman Ben Bernanke is finishing on 31st of January 2014, Janet Yellen is expected to assume the responsabilities if this job. Since the beginning of 2013 economists predicted the entering in the scene of J. Yellen as she is considered the most appropriate person in this position. She is expected to maintain the current economic view of Ben Bernanke and sustain the monetary stimulus program.
The last FOMC minutes revealed the beginning of new discussions about tapering. The majority of the FOMC members are concerned about the long term consequences of the situmuls program especially in the given context of dissapointing economic data that characterized the economy recently. Fed officials want to see the tapering beginning later this year (the last meeting of this year of the FOMC members, which is due to take place in December, is likely to bring relevent information about this situation). The completition of the program is intended to be accomplished in the mid of 2014. Of course is difficult to relay in any of those assumption as long as the data coming from the real economy are not sustaining a stable recovery.
Economists forecast a $5 billion reduction in Treasury purchases while the buying of Mortgage-backed securities is expected to stay in place as the recovery of the housing sector needs further sustainment. Also, FOMC maintains its statement regarding the benchmark interest rate to be kept near zero as long as long as the unemployment exceeds 6.5% and the outcome for inflation doesn’t go above 2.5%.
In the near term, economists are expecting the final decision of the current debt ceiling debate as the government shutdown is approaching 2 weeks. The last news regarding this matter revealed that both Democratic leaders and House Republicans are open to a short term increase in the debt limit. On the other side, Democrats are insisting on imposing budget conditions while Republicans want to attach conditions to both in the form of spending cuts or entitlement changes.