11 Jul 2013
Flash: Still 60% chance Fed tapers in Sept - Nomura
FXstreet.com (Barcelona) - After the Minutes of the June FOMC meeting and the chairman's comments, according to Nomura Economists, "in our judgment, the Federal Open Market Committee (FOMC) still seems on track to take an initial decision to reduce the pace of its asset purchases in September (60% chance), or possibly December (40%)."
As Nomura Economists explain: "First, discussion of the economic criteria suggests that the committee is moving closer to a decision to reduce the pace of asset purchases. Second, the presentation of the outlook in the Minutes was more positive. Finally, while the chairman reiterated strongly the case for continuing highly accommodative monetary policy, also noting that the Fed is missing on both sides of its dual mandate, he also stressed that the FOMC has two tools – asset purchases and forward guidance –and that a change in the mix of these policies should not necessarily be interpreted as a tightening of policy."
In short, Nomura believes the case for tapering in September remain with a validity above average. "While today’s communication does not move our expectations for policy in any significant way, we look forward to Chairman Bernanke’s semi-annual monetary policy testimony next week" Nomura added.
As Nomura Economists explain: "First, discussion of the economic criteria suggests that the committee is moving closer to a decision to reduce the pace of asset purchases. Second, the presentation of the outlook in the Minutes was more positive. Finally, while the chairman reiterated strongly the case for continuing highly accommodative monetary policy, also noting that the Fed is missing on both sides of its dual mandate, he also stressed that the FOMC has two tools – asset purchases and forward guidance –and that a change in the mix of these policies should not necessarily be interpreted as a tightening of policy."
In short, Nomura believes the case for tapering in September remain with a validity above average. "While today’s communication does not move our expectations for policy in any significant way, we look forward to Chairman Bernanke’s semi-annual monetary policy testimony next week" Nomura added.