Fed unlikely to formally announce tapering next week – NFB

The critical event for markets next week will be the Federal Reserve meeting. According to National Bank of Canada analysts, the meeting may prove unextraordinary. They do not expect the Fed to announce formally a reduction of the purchase program, but they see tapering later this year. 

Key Quotes:

“In the U.S., the key focus of next week will be the Federal Reserve’s meeting, though it may prove unextraordinary. After what was a disappointing August jobs report, it’s unlikely we’ll see the Fed formally announce the tapering of its outsized asset purchases. We do, however, still see that occurring this year, so we’ll be closely following Powell’s press conference for clues on the exact timing.”

“While an official announcement isn’t expected to be in the cards, look for the Fed chair to continue to pre-emptively break down any perceived links between the timing of the taper and rate hikes. On inflation, we expect the transitory narrative to be prevalent once again, both in the statement and press conference. Finally, the statement will also be released alongside a fresh Summary of Economic Projections. While June’s SEP saw growth projections upgraded and rate hikes moved into 2022, we don’t expect the same momentum this month.”