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US Fed Watch

US Fed Watch

Inflation concerns to be offset by weaker growth

The Fed is set to announce at next week’s FOMC meeting that it will shortly begin to taper its monthly asset purchases. But of more interest will be the extent to which the new statement reflects the apparent growing concerns among officials about higher inflation, and whether Chair Jerome Powell gives any hints that a sustained overshoot could bring forward interest rate hikes

27 October 2021

US Fed Watch

Fed still preparing ground for QE taper

We think the sharp slowdown in employment growth in August and broader signs of weakness in the incoming activity data mean the Fed will hold off formally announcing a QE taper at its September meeting. The tapering discussion will take centre stage, but we are just as interested in the updated economic projections which will include 2024 for the first time. The latter will provide a guide to how quickly Fed officials see rates returning to neutral once conditions for lift-off have been met.

15 September 2021

US Fed Watch

Fed not yet ready to conclude tapering discussion

A few regional Fed Presidents are pushing for the Fed to begin tapering its Treasury and MBS purchases sooner rather than later. But with Chair Jerome Powell recently arguing that the recovery is still “a ways off” from meeting the “substantial further progress” test, we don’t expect any new guidance on asset purchases at next week’s FOMC meeting.

21 July 2021
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US Fed Watch

Talking about talking about tapering

Fed officials may finally begin ‘talking about talking about’ tapering their asset purchases at next week’s FOMC meeting. But with recent data leaving the economy still some way from making “substantial further progress” towards the Fed’s full employment goal, we suspect that taper won’t begin until early next year.

9 June 2021

US Fed Watch

Newfound optimism unlikely to change dovish stance

We expect the statement following next week’s FOMC meeting to strike a more optimistic tone on the economic outlook, but Chair Jerome Powell is likely to emphasise in his press conference that any changes to the stance of policy are still some way off.

21 April 2021

US Fed Watch

Holding the (dovish) line

We expect the Fed to leave policy unchanged at its mid-March meeting, though officials will try and use the statement and updated economic projections to push back on market expectations that rate hikes are rapidly coming into view. In line with recent comments, we expect Chair Jerome Powell to sound relaxed about the recent rise in longer-term bond yields, though he is likely to leave the door open to intervening if yields were to rise substantially further.

10 March 2021

US Fed Watch

Taper talk premature

Aside from acknowledging the weakness in the incoming economic data in the policy statement, we expect the Fed to leave its policy settings unchanged at next week’s FOMC meeting. The additional fiscal relief passed by Congress late last year, and the prospect of more stimulus soon, has led to speculation that a strong economic recovery could prompt the Fed to withdraw policy support sooner than previously anticipated. But we expect that Chair Jerome Powell will use his post-meeting press conference to push back on suggestions the Fed could taper its asset purchases any time soon.

US Fed Watch

Tinkering at the margins

We expect the Fed to keep its main policy settings unchanged at next week’s FOMC meeting. But officials are set to unveil new guidance on their asset purchases, most likely pledging to maintain them until the economy is on track to achieve the Fed’s employment and inflation goals.

9 December 2020
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