Ask an expert: Why the Fed is in a tough spot

MSN Money's Anthony Mirhaydari explains the central bank's options given the mixed economic signals and how markets might react to its next move.

By MSN Money Partner Sep 16, 2013 12:05PM
All eyes are on the Federal Reserve this week as the U.S. central bank is set to decide whether to cut back on its money-printing stimulus -- and by how much. The Federal Open Market Committee will meet on September 17-18, and U.S. and global markets are closely following the action.

In the video below, MSN Money's Anthony Mirhaydari explains the Fed's options and how markets might react.
Dollar bills floating over U.S. Capitol © CorbisWhile the Fed is widely expected to taper its $85 billion a month bond-buying program, investors want to know not only whether the Fed would reduce the monthly purchases of Treasurys, but also by how much.

As Mirhaydari explains, the markets have been reacting wildly to the Fed possibly pulling back on its cheap money stimulus because markets have been feeding on it. And expectations are just as varied as well, from no tapering to a $10 billion cutback to more.

As for the economy, it doesn't necessarily support a pullback because data have been mixed. Some areas show strength, while others remain weak. Meanwhile, it's possible the Fed could miss its inflation target if it waits too long to taper.

The discussion about the possible tapering of the Fed's stimulus program and its effects on the market continues over at MSN Money's Facebook community.

MSN Money on Twitter and Facebook

Like us on Facebook: MSN Money and Top Stocks

Follow us on Twitter: @msn_money and @topstocksmsn

More from Top Stocks:
4Comments
Sep 16, 2013 1:35PM
avatar
$85 billion/month in QE to get $35 billion/month in GDP growth.  Do the math.

The Federal Reserve is in a tough spot because they are caught in the.....

MOTHER OF ALL LIQUIDITY TRAPS!

Sep 16, 2013 1:10PM
avatar
Let me be Fed chief and I`ll whip this country into shape.
Sep 16, 2013 12:50PM
avatar
inflation? what inflation.  Cost of living is up but yet we don't see inflation. Hmmmm...
Sep 16, 2013 1:45PM
avatar
The Fed is heading toward a big dose of stagflation. No real growth, 2%, with real 3-4% inflation.  That's exactly what happen in Japan when they created an equity and real estate bubble. If the Fed keeps trying to inflate the markets they will get inflation of consumer prices but no real growth in jobs and wages and that's because the Fed can not control globalization. Neither can voters. The US is just going to have to get use to a world that does pay homage to it anymore.  Maybe we can pass an international defense tax to pay for our $800 billion in annual military expenses.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

116
116 rated 1
284
284 rated 2
461
461 rated 3
671
671 rated 4
628
628 rated 5
618
618 rated 6
615
615 rated 7
495
495 rated 8
347
347 rated 9
115
115 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
DYNDYNEGY Inc10
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.