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The following were the expectations for the FOMC December policy decision on Wednesday by the economists at Goldman Sachs, Bank of America Merrill Lynch, Citibank, and other leading banks.
Goldman Sachs: Our central forecast for the first tapering move remains March, with January possible as well. We see a decision to taper this
week as unlikely for three reasons.
Bank of America: Our base case remains for the Fed to start tapering in 1Q next year, although the odds of a December taper have risen recently. We look for the Fed to strengthen its forward guidance over the course of 2014, but expect at most additional qualitative refinements at this meeting.
Citi: The likelihood of a Fed taper announcement this week … roughly 50/50. We think it is very likely that cutbacks in asset purchases will begin either next month or following the January meeting and we continue to expect QE to end in the third quarter of next year.
Barclays: Our base case view is for no change from the FOMC this week; however, we see this as a close call.
Commerzbank: Due to recent strong employment data and the budget deal in Congress, there is now an increased risk that the Fed will begin tapering its bond buying (QE3) at this week’s FOMC meeting. Nonetheless, we think the Fed is somewhat more likely to wait a while longer before taking that step, as inflation continues to fall, drifting increasingly further from the target rate
Credit Agricole: We believe that Fed officials will want to assess the Q4 figures closely before tapering. Policymakers will have a better read on current conditions and growth prospects by the end of next month. At the January FOMC we believe policymakers will be comfortable reducing monthly asset purchases by $10 billion (split equally between Treasuries and MBS securities).
SEB: Given that we believe the Fed will initiate tapering already this week and scale back purchases by USD 5- 10bn they may try to mitigate the negative impact on longer-dated bond yields. Most likely this will be done using forward guidance as for instance lowering the unemployment rate threshold combined with policy tightening to 6% from 6.5% today delay tightening.
The following were the expectations for the FOMC December policy decision on Wednesday by the economists at Goldman Sachs, Bank of America Merrill Lynch, Citibank, and other leading banks.
Goldman Sachs: Our central forecast for the first tapering move remains March, with January possible as well. We see a decision to taper this
week as unlikely for three reasons.
Bank of America: Our base case remains for the Fed to start tapering in 1Q next year, although the odds of a December taper have risen recently. We look for the Fed to strengthen its forward guidance over the course of 2014, but expect at most additional qualitative refinements at this meeting.
Citi: The likelihood of a Fed taper announcement this week … roughly 50/50. We think it is very likely that cutbacks in asset purchases will begin either next month or following the January meeting and we continue to expect QE to end in the third quarter of next year.
Barclays: Our base case view is for no change from the FOMC this week; however, we see this as a close call.
Commerzbank: Due to recent strong employment data and the budget deal in Congress, there is now an increased risk that the Fed will begin tapering its bond buying (QE3) at this week’s FOMC meeting. Nonetheless, we think the Fed is somewhat more likely to wait a while longer before taking that step, as inflation continues to fall, drifting increasingly further from the target rate
Credit Agricole: We believe that Fed officials will want to assess the Q4 figures closely before tapering. Policymakers will have a better read on current conditions and growth prospects by the end of next month. At the January FOMC we believe policymakers will be comfortable reducing monthly asset purchases by $10 billion (split equally between Treasuries and MBS securities).
SEB: Given that we believe the Fed will initiate tapering already this week and scale back purchases by USD 5- 10bn they may try to mitigate the negative impact on longer-dated bond yields. Most likely this will be done using forward guidance as for instance lowering the unemployment rate threshold combined with policy tightening to 6% from 6.5% today delay tightening.
