By James Saft
(Reuters) – Ben Bernanke’s parting gift to emerging markets was some tacit advice they should have understood all along: you are on your own.
The Fed carried on with its tapering campaign at the conclusion of the Federal Open Market Committee meeting on Wednesday, slicing another $10 billion off of monthly purchases, and making no mention of the impact of a nascent crisis in emerging markets.
The statement accompanying the decision was reasonably upbeat, and carried no mention of recent upsets in emerging markets as a possible factor in their thinking. The Fed said the economy “picked up”, that the labor market indicators were “mixed” but showing “further improvement” and that household spending and business investment had advanced “more quickly”.
All in, this was somewhere between a gentle upgrade and on par with their December statement.
Combine that with no dissenting votes and you have the Fed sending out terrible signals not just for emerging markets, but for riskier investments generally. The Fed is apparently not made afraid by what it sees in emerging markets, and seems comfortable with the negative knock-on consequences for markets generally.