Fed Reserve Chairman Ben Bernanke told WSJ that the central
bank could start winding down its $85 billion-a-month bond-buying program later
this year and end it altogether by mid-2014, setting up a high-stakes test to
see if the economy and financial markets can begin to stand on their own.
Financial markets—which have been enlivened by the fuel of
the Fed's easy-money policies—didn't take the news happily. The Dow Jones
Industrial Average finished the day down 206.04, or 1.35%, at 15112.19. Yields
on 10-year Treasury notes jumped 0.126 percentage point to 2.308%, the highest
level since March 2012. The dollar strengthened. Behind the Fed's strategy for
unwinding its bond-buying program were its optimistic new economic forecasts
for next year, including a projection that the jobless rate, which was 7.6% in
May, will fall to between 6.5% and 6.8% by the end of 2014.
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