The Taper Wolf at the Door
Last spring, the mere possibility that the Fed might reduce its purchases of long-term assets – the so-called “taper” – sent market interest rates in the US soaring and currencies in several emerging countries plummeting. Following an unexpected reprieve, investors are again asking what will happen when the Fed follows through.
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SANTIAGO – Last spring, US Federal Reserve Board Chairman Ben Bernanke made a small announcement that had big consequences. The mere possibility that the Fed might reduce its purchases of long-term assets – the so-called “taper” – sent market interest rates in the United States soaring and currencies in countries like Brazil, Turkey, and India plummeting.