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16 Dec 2013
Flash: Market may be under-estimating pace of Fed taper - RBS
FXstreet.com (Bali) - Stronger US data and US budget deal may accelerate rate of taper, notes Greg Gibbs, FX Strategist at RBS.
Key Quotes
"The market may be under-estimating the pace of taper when it starts and the Fed may fear its credibility is stretched if its attempts to strengthen policy guidance too much."
"RBS US Economics team discuss a range of possibilities for the Fed meeting. They can see cases for Fed tapering to begin anytime from Dec, Jan to March. One possibility is that the Fed essentially pre-announce a tapering in January."
"The Fed could state that, if the economy continues to progress as the FOMC expects, a small adjustment to the purchase pace will be announced in January. The Chairman could then use the December press conference to thoroughly explain the Fed's reasons for tapering, reducing the need for a press conference in January."
"This Fed meeting includes the quarterly FOMC projections and Bernanke Press Conference, as such it provides scope for the Fed to send a more nuanced message."
"Perhaps now the more important question than when taper begins is how fast will it occur and when will rates be raised? Our Economists wrote, "We are now beginning to think that the step-down might be even more aggressive.""
Key Quotes
"The market may be under-estimating the pace of taper when it starts and the Fed may fear its credibility is stretched if its attempts to strengthen policy guidance too much."
"RBS US Economics team discuss a range of possibilities for the Fed meeting. They can see cases for Fed tapering to begin anytime from Dec, Jan to March. One possibility is that the Fed essentially pre-announce a tapering in January."
"The Fed could state that, if the economy continues to progress as the FOMC expects, a small adjustment to the purchase pace will be announced in January. The Chairman could then use the December press conference to thoroughly explain the Fed's reasons for tapering, reducing the need for a press conference in January."
"This Fed meeting includes the quarterly FOMC projections and Bernanke Press Conference, as such it provides scope for the Fed to send a more nuanced message."
"Perhaps now the more important question than when taper begins is how fast will it occur and when will rates be raised? Our Economists wrote, "We are now beginning to think that the step-down might be even more aggressive.""