21 Aug 2013
Flash: Speculation on next Fed chair undermines sentiment – Deutsche Bank
FXstreet.com (New York) - The continued debate about the next Fed Chair is not helping sentiment with plenty of air time being dedicated to contrasting Yellen’s supposedly methodological policy approach against Summers’ less bond-market-friendly views on QE, notes Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank.
Key quotes
Amid this background, today’s FOMC minutes will garner a lot of attention. “US economists expect the minutes to shed greater insight regarding the breadth and degree of comfort among Committee members toward a near-term QE taper.”
“It will also be interesting to see whether there is any talk about tweaking employment and inflation thresholds with respect to the Fed’s current rate guidance. Recall that the actual meeting statement from July was seen as more dovish than the one from June.”
Firstly, the statement adjusted its description of growth in the first half of the year to “modest” from “moderate”. Secondly, the statement expressed some concern that the recent backup in mortgage rates could slow the outlook for housing. Thirdly, the meeting statement also included a relatively dovish comment that “The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance”.
Key quotes
Amid this background, today’s FOMC minutes will garner a lot of attention. “US economists expect the minutes to shed greater insight regarding the breadth and degree of comfort among Committee members toward a near-term QE taper.”
“It will also be interesting to see whether there is any talk about tweaking employment and inflation thresholds with respect to the Fed’s current rate guidance. Recall that the actual meeting statement from July was seen as more dovish than the one from June.”
Firstly, the statement adjusted its description of growth in the first half of the year to “modest” from “moderate”. Secondly, the statement expressed some concern that the recent backup in mortgage rates could slow the outlook for housing. Thirdly, the meeting statement also included a relatively dovish comment that “The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance”.