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Nov 03 - 12:55 AM

USD: Time To Taper - SEB

By eFXdata  —  Nov 02 - 04:30 PM

SEB Research discusses its expectations for tomorrow's FOMC policy meeting.

"Time to taper. We expect the FOMC to decide to cut back asset purchases by USD15bn per month, starting in mid -November and concluding them in June, but keep the door open for adjusting the pace to changes in economic developments at coming meetings," SEB notes.

"Managing risks. The Fed funds target rate is expected to remain within the 0.00 -0.25% interval. Markets are now pricing more than two hikes next year, implying a short time -line between tapering and rate hikes. This notion is supported by the Fed which clearly sees a need to get taper done in order to allow for rate hikes, if needed to counter persistently high inflation, even if this is not the Fed’s main scenario.

Unchanged guidance. The Fed has started to discuss the possibility of an emerging conflict between the Fed’s dual goals and this may be acknowledged in the statement. Still, we think it is too early for the Fed to change its guidance which requires the Fed to reach both of its goals before hiking rates," SEB adds.

SEB Research/Market Commentary


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