In the early part of the week, the financial world buzzed with the news that Larry Summers, a prominent economist known for his controversial past, had withdrawn his candidacy for the next Chairman of the Federal Reserve. The markets responded positively, with the S&P 500 appreciating by 13 points over Monday and Tuesday.
However, by Wednesday, the initial excitement over Summers’ exit had faded, shifting the focus back to current Fed Chairman Ben Bernanke and the crucial decisions ahead. Wall Street held its breath, eager to learn about the Fed’s next steps.
Many anticipated a reduction in the Fed’s monthly asset purchasing program, perhaps trimming it by $10 to $15 billion. When the pivotal announcement came, Bernanke surprised many by opting to maintain the current pace. Key excerpts from Wednesday’s FOMC statement reflected this decision:
“Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader
