End of Federal Reserve bond-buying programme 'to have limited effect'

28 April 2011

The end of the Federal Reserve's bond-buying programme will have a limited effect on the US economy and its financial markets, it has been claimed.

Ben Bernanke, chairman of the central bank, said the fallout from the finish of the $600 scheme will not be "significant", adding the institute will carry on reinvesting maturing debt after June, Bloomberg reports.

The industry figure explained the programme will be completed by the conclusion of 2011's second quarter.

He observed: "We are going to continue to reinvest maturing securities, both Treasuries and MBS [mortgage backed securities], so the amount of securities that we hold will remain."

Monetary policy easing is likely to remain at the same constant level going forward after the next two months, Mr Bernanke added.

He explained the Federal Reserve recently cut its economic growth forecasts for the year, following weaker growth than anticipated in the US for the first three months of 2011.

By Tony Aynsley

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