FOMC

By David Gallerano
♦ Ben Bernanke sent “contradictory signals about how the Fed was going to assess the economy”. His is a “confused guidance”, which makes it hard to tell whether the actual policy on tapering is just a pause for the Fed or whether there needs to be clear evidence of acceleration. Michael Mackenzie says the FOMC’s delay of the taper yesterday affects Fed’s credibility.
♦ Syria’s war rages on but Damascus nightclubs remain obstinately open.
♦ The Syrian conflict is spilling over to Iraq with the city of Muqdadiya, in the Diyala Province, becoming the theatre for a “Balkans-style” ethnic conflict with Sunnis supporting the rebels and Shiites backing the Assad government.
♦ The Arabist reports the story of Mohamed Gabr, police chief of a small village in Egypt, who was brutally killed by a group of Islamists.
♦ The United Nations Economic Commission on Africa (UNECA) cancelled Morten Jerven’s presentation of his research “due to lobbying from South African Statistician General Pali Lehohla”. Jerven’s research criticizes several African Statistic institutes and has already raised protests in Zambia and South Africa. Read more

When we look back on the FOMC meeting on June 19 2013, it will probably be seen as the moment when the Fed signalled that it was beginning the long and gradual exit from its programme of unconventional monetary easing. The reason for this was clear in the committee’s statement, which said that the downside risks to economic activity had diminished since last autumn, presumably because the US economy had navigated the fiscal tightening better than expected and the risks surrounding the euro had abated.

This was the smoking gun in the statement. With downside risks declining, the need for an emergency programme of monetary easing was no longer so compelling. The Fed has been the unequivocal friend of the markets for much of the time since 2009, and certainly ever since last September. That comfortable assumption no longer applies.

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By Ruona Agbroko

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