Back
12 Sep 2013
Flash: Fed still on track to begin tapering next week – NAB
FXstreet.com (Lisbon) - The Fed should is still on track to begin the tapering of its QE program (i.e. a reduction in the size of Fed asset purchases in ‘measured steps’) following its September meeting (which ends 18 September), suggests Antony Kelly at NAB.
Key quotes
“However, we also see the risk of tapering being delayed as reasonably high. The recent data have not fundamentally changed that view.”
“On the face of it, the reduction in the unemployment rate from 7.6% at the time of the last FOMC meeting to 7.3% in August should have significantly increased the prospect of a September start to tapering. The Fed Chairman has indicated that he expects the unemployment rate to be around 7.0% when the asset purchases are stopped. So if they are to reduce the purchases in a series of steps they will need to start soon.”
However, “the weakness in other aspects of the report – the slowdown in non-farm employment growth and the fall in workforce participation rate may cause doubts, as may continuing below target inflation, and the slow start to the quarter for some partial indicators of activity. The strength in business surveys will, however, provide some comfort about the underlying direction of the economy.”
Key quotes
“However, we also see the risk of tapering being delayed as reasonably high. The recent data have not fundamentally changed that view.”
“On the face of it, the reduction in the unemployment rate from 7.6% at the time of the last FOMC meeting to 7.3% in August should have significantly increased the prospect of a September start to tapering. The Fed Chairman has indicated that he expects the unemployment rate to be around 7.0% when the asset purchases are stopped. So if they are to reduce the purchases in a series of steps they will need to start soon.”
However, “the weakness in other aspects of the report – the slowdown in non-farm employment growth and the fall in workforce participation rate may cause doubts, as may continuing below target inflation, and the slow start to the quarter for some partial indicators of activity. The strength in business surveys will, however, provide some comfort about the underlying direction of the economy.”