4 Nov 2013
Flash: Fed tapering in December? – BBH
FXstreet.com (Barcelona) - Research teams at BBH noted that markets are remaining tentative to speculation around rong>rong>Fed tapering and explained that there is speculation for Tapering December.
rong>Key Quotes:
“There has been increased speculation that the Federal Reserve can begin tapering in December. The FOMC statement dropped the reference to tighter financial conditions and the October manufacturing ISM was stronger than expected, as was September industrial production”.
“For the same reasons we did not think it very likely in September, we are skeptical of a December tapering. First, the impact of the government shutdown will distort much of the data in the coming weeks, including the October employment report on November 8 (for which the ADP data was disappointing).
“Second, measured inflation remains low”.
“Third, when the Fed revised lower its growth forecasts in September, it did not cut sufficiently, especially in light of the government shutdown”.
“Fourth, and perhaps the least appreciated, is among the most compelling reasons for the Fed not to taper in December: The credibility of the institution is clear better served by maximizing the degrees of freedom for the next Federal Reserve Chair”.
“There has been increased speculation that the Federal Reserve can begin tapering in December. The FOMC statement dropped the reference to tighter financial conditions and the October manufacturing ISM was stronger than expected, as was September industrial production”.
“For the same reasons we did not think it very likely in September, we are skeptical of a December tapering. First, the impact of the government shutdown will distort much of the data in the coming weeks, including the October employment report on November 8 (for which the ADP data was disappointing).
“Second, measured inflation remains low”.
“Third, when the Fed revised lower its growth forecasts in September, it did not cut sufficiently, especially in light of the government shutdown”.
“Fourth, and perhaps the least appreciated, is among the most compelling reasons for the Fed not to taper in December: The credibility of the institution is clear better served by maximizing the degrees of freedom for the next Federal Reserve Chair”.