Fed to slow pace of monthly bond purchases by another $10B despite turmoil in emerging markets
WASHINGTON (AP) - Given the U.S. economy’s growing strength, the Federal Reserve pushed ahead Wednesday with a plan to shrink its bond-buying program, even though the prospect of reduced stimulus and higher interest rates has rattled global markets.
The central bank said it will cut its monthly bond purchases starting in February by $10 billion to $65 billion. It also reaffirmed a plan to keep short-term rates at record lows to try to reassure investors that it will keep supporting an economy that’s stronger than at any point since the recession yet remains less than fully healthy.
The Fed’s decision came in a statement after the final policy meeting of Ben Bernanke, who will step down Friday after eight years as chairman. He will be succeeded by Vice Chair Janet Yellen.
Most economists expect that under Yellen, the Fed will announce a string of $10 billion monthly reductions in bond purchases at each meeting this year, concluding with a final $15 billion cut in December. Still, if the American economy were to falter, the Fed has stressed that it might suspend its pullback in bond buying so it could keep aggressively holding down long-term loan rates.
Many global investors fear that reduced Fed bond buying will raise U.S. interest rates and cause investors to move money out of emerging markets and into the United States for higher returns. Currency values in emerging economies have fallen over that concern.
Modest snowfall creates chaos in Atlanta, stranding thousands of drivers and students
ATLANTA (AP) - Thousands of Atlanta students stranded all night long in their schools were reunited with their parents Wednesday, while rescuers rushed to deliver blankets, food, gas and a ride home to countless shivering motorists stopped cold by a storm that paralyzed the business capital of the South with less than 3 inches of snow.
As National Guardsmen and state troopers fanned out, Mayor Kasim Reed and Georgia Gov. Nathan Deal found themselves on the defensive, acknowledging the storm preparations could have been better. But Deal also blamed forecasters, saying he was led to believe it wouldn’t be so bad.
The icy weather wreaked similar havoc across much of the South, closing schools and highways, grounding flights and contributing to at least a dozen deaths from traffic accidents and a mobile home fire.
Yet it was Atlanta, home to major corporations and the world’s busiest airport, that was Exhibit A for how a Southern city could be sent reeling by winter weather that, in the North, might be no more than an inconvenience.
The mayor admitted the city could have directed schools, businesses and government offices to stagger their closings on Tuesday afternoon, as the storm began, rather than dismissing everyone at the same time.
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