8 Aug 2013
Flash: The Fed's plans still include tapering this year – Wells Fargo
FXstreet.com (Córdoba) - The policy statement from the July 30-31 FOMC meeting contained only minor changes, which Wells Fargo analysts believe means some reduction in monthly security purchases will begin later this year.
Key quotes
"Although the changes in the policy statement were minor, they all pointed toward slightly less economic growth. The previous statement noted that ‘economic activity has been expanding at a moderate pace.’ This statement notes that ‘economic activity expanded at a modest pace during the first half of the year.’"
"The downgraded assessment of economic growth means that the economy is marginally further away from the point where the Fed would like it to be when it begins to taper its monthly security purchases".
"The Fed also highlighted a couple of risks. The language on inflation was firmed up by noting that ‘inflation persistently below (the FOMC’s) 2 percent objective could pose risks to economic performance’."
"The bottom line for the financial markets is that the Fed very much would like to begin to reduce its monthly securities purchases at some point this year. The timing of a tapering announcement, which still seems most likely to be in September, now appears to be dependent on a couple of key data assumptions being played out. Economic growth needs to strengthen. The housing recovery needs to firm back up, and inflation needs to move back towards the Fed’s 2 percent comfort zone. Given the short time period between now and September, the direction these variables take is probably more important than the magnitude".
Key quotes
"Although the changes in the policy statement were minor, they all pointed toward slightly less economic growth. The previous statement noted that ‘economic activity has been expanding at a moderate pace.’ This statement notes that ‘economic activity expanded at a modest pace during the first half of the year.’"
"The downgraded assessment of economic growth means that the economy is marginally further away from the point where the Fed would like it to be when it begins to taper its monthly security purchases".
"The Fed also highlighted a couple of risks. The language on inflation was firmed up by noting that ‘inflation persistently below (the FOMC’s) 2 percent objective could pose risks to economic performance’."
"The bottom line for the financial markets is that the Fed very much would like to begin to reduce its monthly securities purchases at some point this year. The timing of a tapering announcement, which still seems most likely to be in September, now appears to be dependent on a couple of key data assumptions being played out. Economic growth needs to strengthen. The housing recovery needs to firm back up, and inflation needs to move back towards the Fed’s 2 percent comfort zone. Given the short time period between now and September, the direction these variables take is probably more important than the magnitude".