In the United States, three sources of policy uncertainty will come to a head this autumn. For starters, it remains unclear whether the Federal Reserve will begin to “taper” its open-ended quantitative easing (QE) in September or later, how fast it will reduce its purchases of long-term assets, and when and how fast it will start to raise interest rates from their current zero level. There is also the question of who will succeed Ben Bernanke as Fed Chairman. Finally, yet another partisan struggle over America’s debt ceiling could increase the risk of a government shutdown if the Republican-controlled House of Representatives and President Barack Obama and his Democratic allies cannot agree on a budget.
The
first two sources of uncertainty have already affected markets. The
rise in US long-term interest rates – from a low of 1.6% in May to
recent peaks above 2.9% – has been driven by market fears that the Fed
will taper QE too soon and too fast, and by the uncertainty surrounding
Bernanke’s successor.
http://www.project-syndicate.org/commentary/the-main-risks-to-the-global-economy-in-the-coming-months-by-nouriel-roubini