Federal Reserve unlikely to interfere in global markets

With US markets having marked improvement with no real end to the recovery in sight, the best six months of job gains since 2006 have helped reduce the odds of a third round of asset purchases by the Federal Reserve. Which means that federal officials are unlikely needed to take any steps to avoid further market downturns.

Most economists agree that Chairman Ben S. Bernanke will refrain from any action to expand the Fed’s $2.89 trillion balance sheet this year. In January 50% of economists when asked said that the Fed would be likely forced to intervene to avoid another US economic slowdown.

Bernanke, in Senate testimony before a March 9 jobs report, gave no sign he is considering a new program of so-called quantitative easing. Still, he repeated that the main interest rate is likely to stay near zero through at least late 2014 to boost a job market that remains “far from normal.” The Federal Open Market Committee plans to release a statement today after its meeting in Washington.

However, one cloud of doubt remains, despite best efforts, gas prices remain at a high trading at over 100 dollars a barrel. President Obama and Whitehouse officials say that steps will be taken to ensure energy stability, but for the time being oil prices are expected to stay where they are unless the eurozone sees another chance at defaulting.

Park Sae-jin swatchsjp@ajunews.com