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Cut-backs to the stimulus hang over Fed meeting

The Federal Reserve began a two-day meeting Tuesday as speculation mounted that chairman Ben Bernanke is preparing to announce cut-backs on the US's $85bn-a-month economic stimulus programme.

Bernanke will hold a press conference Wednesday to discuss the Fed's plans. The event comes amid speculation that he will announce his resignation: Bernanke has made clear he will not seek a third term as chairman and Barack Obama is now assessing replacements.

The Fed's third round of bond buying, known as quantitative easing, was announced last September and has so far pumped about $800bn into the bond markets in an attempt to kick-start investment and keep interest rates down. In June, Bernanke announced some "tapering" of policy could begin later this year if the economy continued to improve.

The Federal Reserve's open markets committee (FOMC), however, is split on QE with some concerned about the unintended consequences of the massive programme. In previous FOMC meetings some members have made clear they want an early end to the programme.

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