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As Fed meets this week it faces many uncertainties

September 16, 2013 • National News


FILE – In this July, 18, 2013, file photo shows Federal Reserve Chairman Ben Bernanke, testifing before the Senate Banking, Housing, and Urban Affairs Committee hearing on “The Semiannual Monetary Policy Report to the Congress” on Capitol Hill in Washington. The Federal Reserve is expected to take its first step toward reducing the extraordinary stimulus it’s supplied to help the U.S. economy rebound Wednesday Sept. 18. (AP Photo/Manuel Balce Ceneta, File)

WASHINGTON (AP) — The Federal Reserve is being engulfed by the one thing it tries to prevent: uncertainty.

Will the Fed take its first step Wednesday toward reducing the extraordinary stimulus it’s given the U.S. economy?

Will its eventual pullback jolt the financial markets?

Who will fill several expected vacancies on the Fed’s policy board next year?

And, with Lawrence Summers’ withdrawal from consideration, who will lead the Fed once Ben Bernanke’s term expires in January, ending one of the most tumultuous chapters in the Fed’s 100-year history?

Uncertainty tends to rattle investors. Starting this week, the Fed may begin to supply the answers the financial markets are looking for.

Here’s a look at the various uncertainties the central bank faces:

TO TAPER OR NOT

Though hiring and economic growth in the United States remain soft, the Fed is widely expected this week to slow the pace of its bond purchases. Its purchases of Treasury and mortgage bonds have been designed to keep long-term loan rates low to get people to borrow and spend and invest in the stock market.

Most economists expect the Fed’s initial move to be small — a reduction in monthly purchases from $85 billion to $75 billion.

One reason: The Fed for months has been preparing markets for such a Login to read more

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