FOMC Policy Meeting: Has The Economy Improved Enough?

As long as Powell managed to keep that line of “things are improving, but not enough to consider tapering”, we ought to see a

little reaction in the market.

But reporters are expected to badger him about where asset purchases are going. Powell is likely to try to avoid even using the word “taper” (it might set off some of the algos).

Where things are going

The consensus of expectations is that the Fed won’t start tapering off its asset purchases until March of next year (with a potential first rate hike in March of 2023).

Any policy change in the meantime is expected to be “technical”. So, the thinking is that the Fed will try to stay on the sidelines of the economy for the next several months. But, ironically, will require more public appearances and commentary to reassure investors that’s the case.

The three criteria that need to be met before the Fed is expected to consider tapering are:
– Job market has reached “full employment”
– Inflation is at 2%
– Inflation is likely to exceed 2% for an extended period of time.

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