On Tuesday the Federal Open Market Committee will convene in Washington, D.C., as it does every six weeks or so. At that meeting, it is still widely expected that Federal Reserve Chair Janet Yellen and her colleagues from regional Federal Reserve banks will stop the Fed’s remaining $15 billion-a-month asset purchases, putting an end to the greatest monetary stimulus campaign in U.S. history.
 
For six years the Fed has bought trillions of dollars’ worth of U.S. Treasurys and mortgage-backed securities in an attempt to jump-start the U.S. economy. As a result, its balance sheet has increased to a record 25% of the nation’s gross domestic product—higher than at the end of World War II or at the heart of the Great Depression. Attention has already shifted to future interest-rate hikes, the next logical step in this dreaded tightening cycle, which the market believes will begin somewhere between the middle of next year and the beginning of 2016.
 
Those who have criticized what they consider a period of monetary lunacy will praise the normalization of Fed policy. Others will lament it and issue dire forecasts. Yet there is every reason to believe that this month’s highly anticipated end to so-called quantitative easing will be nothing more than a tactical retreat by the U.S. central bank, and that next year’s rate increase won’t materialize.
 
Federal Reserve Chairwoman Janet Yellen Associated Press
 
First, the U.S. economy remains stubbornly weak. In four of the past five years, the GDP growth forecast made by the Federal Open Market Committee at its November or December meetings for the following year has missed the mark by 0.5% to as much as 1.5%. That includes 2014, for which the middle of the Fed’s core projection range—known as “central tendency”—was cut to 2.1% last month, from 3% in December 2013. As much as Fed officials would like to revert to a more orthodox policy, such reversal is data-dependent, and when it comes to predicting data, their track record has been poor.
 
The minutes from September’s FOMC meeting, released on Oct. 8, showed that several members actually viewed the risks to real GDP growth as weighted to the downside. This isn’t surprising, considering the remaining slack in the U.S. labor market and the worryingly low inflation rate.
 
Some participants at the September FOMC meeting also expressed concern that weak foreign growth could slow down the U.S. economy. In particular, they cited the eurozone, for which the International Monetary Fund now sees a 40% chance of recession and a 30% risk of deflation by next year. Germany, Europe’s economic leader, recently released its worst industrial-output and export numbers since 2009, showing a respective 4% and 5.8% plunge in August.
 
Can the emerging world save the day? That seems unlikely. The Chinese economy keeps decelerating and is now expected by the IMF to grow by 7.4% this year, its lowest rate since 1990. Brazil fell back into recession in the first half of the year, while Russia’s economy is being severely hurt by the consequences of the Ukrainian conflict and should grow by a negligible 0.2% this year. Overall, the IMF now sees emerging market and developing economies growing by 4.4% in 2014, down from 5.1% back in January. Japan is still suffering from the impact of its April sales-tax hike, as well as the lack of structural reforms, which has led the IMF to also cut its growth outlook, from 1.7% in January to a meager 0.9%.
 
Another reason to doubt the Fed’s return-to-normalcy pledge is the recent appreciation of the U.S. dollar, which is now up 8.5% on average against major world currencies since its May lows. A strengthening greenback will hurt U.S. exports. It is also a drag on inflation which, so far, remains below the Fed’s 2% target. This could actually be one of the most compelling reasons for Ms. Yellen and her FOMC colleagues to reconsider their exit strategy. Faced with a European Central Bank that has finally decided to step up its support to eurozone economies, and a Bank of Japan  that continues to print trillions of yen every month, the Fed could have no choice but to resume its easing efforts to keep the dollar competitive in what already looks like a tacit currency war.
 
Then there is always the risk of a severe market correction that could be triggered by almost anything: a spreading of the Ebola epidemic, a geopolitical development (such as another Russian incursion), a financial event (such as a large bank or a country defaulting), or simply a spontaneous selloff caused by high valuations and an accumulation of bad news, as we have seen in recent weeks on Wall Street and abroad.
 
Since 1951, there have been only nine periods of more than a year during which U.S. equities didn’t experience a drawdown of 10% or more. Since the last such drawdown 1,120 days have passed, which puts the current correction-free episode in the top four in terms of length. The other three all happened in significantly stronger growth environments.
 
“Don’t fight the Fed” has become a sacred market mantra, and ignoring it has been a costly exercise for some. Trusting the Fed, as it vows to end monetary easing and raise interest rates, could prove an equally harmful strategy.
 
 
Mr. Hatchuel is managing partner of Square Advisors LLC, a New York-based asset-management firm.