With price growth in the euro zone at a record high even before Moscow began its assault on Feb. 24, policymakers were already pushing for a quicker exit from its asset purchases, opening the way for an interest rate hike late this year.
"It is likely that the Fed is going to sit it out because the problem right now is we do not know what the impact of government shutdown is going to be," said James Glassman, Senior Economist, JP Morgan Chase Bank.
Tim Condon, chief economist for Asia, at ING expects Indonesia's GDP growth to return to 7-8 percent within the next five years. For the second quarter, Indonesia's GDP grew 5.81 percent on year, its slowest rate in three years; the central bank expects 2013 GDP growth of 5.8-6.2 percent.
Such a decision would spark a bout of volatility in financial markets, highly undesirable given the fragile state of the recovery in the world`s largest economy, market watchers say.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 percent, while Japan's benchmark Nikkei stock average shed 0.8 percent in early trade.
While the Fed said the US economic recovery continued apace, it pledged to continue buying USD 85 billion of bonds each month and pointed to modest growth, higher mortgage rates and low inflation as risks to overall economic well-being. Missing entirely was any mention of pulling back on bond purchases
James Glassman believes the Fed is talking about tapering only because they feel further asset purchases won‘t be necessary if the economy is on the process of recovering and if inflation picks up and if the job market continues to improve