The market reaction to the Federal Reserve’s latest policy statement shows the central bank's new leader, Janet Yellen, is a more attentive guardian than her predecessor, Ben Bernanke.
There was angst ahead of Wednesday’s decision. That’s because it was clear Ms. Yellen’s Fed was poised to signal definitively that the age of zero interest rates was over. The world’s money managers and traders retain harsh memories from 2013, when Mr. Bernanke naively thought financial markets were mature enough to handle the news that the Fed intended to slow its bond-buying program. The notion of a world without the Fed creating tens of billions of dollars each month to buy bonds roiled financial markets by sparking a flight of capital from emerging markets. Mr. Bernanke went from hero of the financial crisis to father of the “taper tantrum.” His counterparts at other central banks were unamused, as they were forced to compensate with various policy measures of their own to keep their currencies from crashing and their markets from collapsing.
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