Considering the current state of the US economy, economists are forecasting on the continuity of Federal Reserve’s $85 billion worth of monthly bond buying till the end of the fourth quarter of the year. The market has also been estimating that the central bank’s assets level to reach a record level of around $4 trillion by the end of first half of next year. For now, there is no sign that the Fed could have been re-thinking on halting the unprecedented easing program. The rate of unemployment is believed to be the core factor leading to revising or trimming the bond purchases.

An unemployment rate of around 7 percent shall be the threshold, when the Fed would actually start to consider on pulling back of its easing program. Upon reaching a satisfactory economic arena, in terms of recovery, Fed is expected to accommodate reverse-easing mechanisms, so that the market could easily adopt the re-structured monetary policy measures. No matter whatever the market or economists are forecasting or talking about, it is the US labor market that concerns the Fed most and drive the central bank’s act.

Combined with the improving job market, optimism seen in the US housing market and hawkish stock prices has taken the consumer sentiments towards north. The most important thing that the market ought to resist and be in line with Fed’s policy is the rate of inflation. A crucial challenge for the Fed in the coming days would be to manage the rate of inflation, for which the Fed has set a ceiling of 2 percent, and pull back the unemployment rate to an index of around 7 percent. Despite the ongoing asset buying program has been eventually fostering the housing and stock market, if scrutinized minutely, the Fed, as per the market analysts’, should have been discussing on lowering or cutting the assets purchase to half amidst fears of another round of asset bubble of price instability in the US economy.

Will the Fed be able to drag down the unemployment rate to 7 percent or lower the same by the mid of next year? Will the central bank of the U.S continue its unprecedented quantitative easing program by the end of the fourth quarter of current year? Would the U.S market respond to the quantitative easing regime the same way the Fed wants the economy to? Many questions and dilemma concerning the Fed’s possible action are coming out from the market. It is the time that will tell or decide the destiny of the economic state of the largest economic empire in the world.