US Fed Watch

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
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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.

US Fed Watch

Fed in wait-and-see mode

Having rolled out major changes over the past few months and with the incoming economic data still solid, we expect the Fed to stand pat at next week’s meeting and leave its statement virtually unchanged. But the meeting will take place in the shadow of the election, as well as another wave of coronavirus infections taking hold across the country, both of which could yet prompt the Fed to change course over the coming months.

28 October 2020

US Fed Watch

Fed’s actions will speak louder than its words

The Fed’s new average inflation framework implies that more stimulus measures are on the way, but it isn’t clear if officials will be ready to make wholesale changes at next week’s FOMC meeting. Nevertheless, the accompanying statement should at least emphasise that rates will not be raised until the 2% inflation target has been achieved “on a sustained basis”, with the updated economic projections likely to indicate that won’t happen until 2024 at the earliest.

9 September 2020

US Fed Watch

Fed looks to strengthen forward guidance

The upcoming FOMC meeting, which concludes on 29th July, will probably be uneventful, but the Fed could strengthen the forward guidance in its statement, announce revisions to its so-far disappointing 13(3) lending facilities or up the pace of its Treasury securities purchases to prevent a further contraction in the size of its balance sheet.

22 July 2020
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