Fed unlikely to taper QE3 soon

We don’t expect that the recent improvement in labour market conditions and growing concerns over the costs of ultra-loose monetary policy will prompt the Fed to reduce the size of its monthly asset purchases soon. The most that can be expected from the policy meeting that concludes on Wednesday 20th March are some slightly more optimistic economic forecasts and a tweak to the statement that places a bit more emphasis on the costs of QE. That said, it has become less likely that QE will continue, at least at the current pace, into next year.