Uncertainties surround QE taper timing and pace

With the Delta-linked resurgence in coronavirus infections adding to the downside risks to economic growth and officials still split on exactly what qualifies as “substantial further progress” toward meeting the full employment goal, we don’t expect Chair Jerome Powell to provide any definitive guidance in his Jackson Hole speech tomorrow on when the tapering of the Fed’s asset purchases will begin. More generally, there is still uncertainty surrounding the pace and composition of the run-down in asset purchases and whether the Fed will commit to a pre-announced deterministic path or prefer to make adjustments on a meeting-by-meeting basis.