The Fed now looks as if it will start to scale back its asset purchases next spring, although the tone of the FOMC's late-October statement suggests that the process might even begin earlier. As the central bank gradually becomes less accommodative over the next couple of years we expect government bond yields to drift higher and the dollar to rise. By contrast, investors' appetite for "risky" assets is likely to wane. In general, though, we do not expect the prices of risky assets to fall back sharply given that monetary policy elsewhere is set to remain highly accommodative. Moreover, the Fed itself is likely to tread very cautiously and not raise its funds rate until 2015.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services