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Fed-watchers are pretty sure they know what the word on a Fed taper will be when the official announcement comes following the Federal Open Market Committee (FOMC) meeting today and tomorrow (Wednesday)…
Wait a while longer.
While the U.S. Federal Reserve has hinted several times in the past six months that it is considering cutting back on its monthly purchase of $85 billion in bonds and mortgage-backed securities (known as quantitative easing, or QE), most expect no Fed taper in the immediate future.
It just doesn't make sense.
And the Fed historically has resisted making any disruptive policy moves in December, as they know trading is winding down for the year.
On that score, unemployment has improved to 7% (the Fed has said it would like to see it fall to 6.5%), and there's been a pop in the gross domestic product numbers to 3.6% as well as better November retail sales.
But inflation remains below the Fed target of 2%. The consumer price index (CPI) is 1.2%, and the measure the Fed prefers, the personal consumption expenditures index, is just 0.7%.
All that said, a Bank of America Merrill Lynch survey of fund managers showed a paltry 11% expect a QE taper from the FOMC meeting today.
So if the Fed begs off a QE taper this week, when might we see it?
In the survey of fund managers, 32% expected a January taper and 42% expected a March taper.
But given Yellen's extremely dovish views, the Fed taper may be much farther into the future…
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.