So, it has begun. On Wednesday 18 December Federal Reserve chairman Ben Bernanke announced that the US Central Bank will begin to scale back its bond buying programme – what’s known as quantitative easing. The era of abnormally low interest rates is coming to an end.
To my mind, Bernanke could only have been more timid with his ‘taper’ if he and his central banking colleagues had decided not to taper at all.
From January, the Fed will buy $10 billion fewer government bonds and mortgage-related securities each month. But it will still be buying $75 billion worth.