Back
23 Apr 2014
Fed's watcher Hilsenrath: Fed on track for further tapering
FXStreet (Bali) - Fed's watcher Jon Hilsenrath, on his last article just published, notes that Fed the central bank is likely to continue the taper on their next meeting by cutting bond buys to $45 billion.
As Hilsenrath notes, "Fed officials are on track to reduce their monthly bond buying to $45 billion at their policy meeting next week and stick with a communications approach that leaves investors with a little uncertainty about when the central bank will start raising short-term interest rates."
The Fed watcher adds that "officials now are trying to retain some flexibility on the interest-rate outlook as they try to resolve several mysteries about the recovery, which has generated surprisingly slow economic growth, low inflation and faster declines in standard measures of unemployment than expected."
Since Janet Yellen took charge as Fed's Chairwoman, uncertainty over the US rates outlook has kept bonds yields confined in a tight range between 2.5 and 3%, as officials fail to clearly telegraph when a rates hike campaign may come about.
As Hilsenrath observes, "futures markets indicate investors believe the Fed won't start raising rates until mid-2015 or later, a view that seems to be broadly in line with officials' expectations", adding that "Fed officials have signaled that though they don't know exactly when they'll raise rates, they don't expect to move them up aggressively once they start."
As Hilsenrath notes, "Fed officials are on track to reduce their monthly bond buying to $45 billion at their policy meeting next week and stick with a communications approach that leaves investors with a little uncertainty about when the central bank will start raising short-term interest rates."
The Fed watcher adds that "officials now are trying to retain some flexibility on the interest-rate outlook as they try to resolve several mysteries about the recovery, which has generated surprisingly slow economic growth, low inflation and faster declines in standard measures of unemployment than expected."
Since Janet Yellen took charge as Fed's Chairwoman, uncertainty over the US rates outlook has kept bonds yields confined in a tight range between 2.5 and 3%, as officials fail to clearly telegraph when a rates hike campaign may come about.
As Hilsenrath observes, "futures markets indicate investors believe the Fed won't start raising rates until mid-2015 or later, a view that seems to be broadly in line with officials' expectations", adding that "Fed officials have signaled that though they don't know exactly when they'll raise rates, they don't expect to move them up aggressively once they start."