Fed to taper bond buying in Q4 2021 – Bloomberg survey

Ahead of this week’s FOMC decision, the latest Bloomberg survey of 49 economists shows that the US Federal Reserve (Fed) could begin tapering its  $120 billion monthly bond-buying in the fourth quarter of this year, as the US economy stages an impressive post-pandemic recovery.

Key findings

“About 45% of the economists expect the Federal Open Market Committee to announce tapering in the fourth quarter with 14% seeing that happening in the preceding three months. The survey of 49 economists was conducted April 16-21. The result is a hawkish shift from March when slightly more viewed tapering as a 2022 event.”

“Economists say they will scrutinize the statement language and press conference for hints of a potential tapering. Powell has said he’ll alert markets well in advance of that change when the committee views its goals in sight, and that a policy change will hinge on actual incoming economic reports, not just bullish forecasts.”

“More than two-thirds of the economists surveyed expect the FOMC will give an early-warning signal of tapering this year, with the largest number -- 45% -- looking for a nod during the July-September quarter.”