Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

FOMC Preview: Will Fed Give Taper Start Date?

By Kathy LienForexSep 21, 2021 20:16
ng.investing.com/analysis/fomc-preview-will-fed-give-taper-start-date-92208
FOMC Preview: Will Fed Give Taper Start Date?
By Kathy Lien   |  Sep 21, 2021 20:16
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
There are only three more Federal Reserve monetary policy announcements before the end of the year. If Fed Chairman Jerome Powell wants to give the market ample time to prepare for tapering asset purchases, the central bank will need to make some type of announcement tomorrow. There’s no doubt that the topic of taper will be addressed, most likely during the press conference. The one question that will determine how the market responds is the taper start date. 
 
The only thing market participants want to know from the Fed on Wednesday is whether it will provide a specific taper start date. For the past few months, it was widely believed that it would lay out a precise plan to reduce asset purchases in September. At its last meeting in July, the Fed said the criteria for providing ample notice had not been reached. In August ,at Jackson Hole, Powell said the central bank is likely to begin tapering before the end of the year, but added there is still “much ground to cover to reach maximum employment,” which is seen as the criteria for a rate hike.
 
All this hesitancy to begin the taper process was before the most recent disappointments in non-farm payrolls and inflation. The latest downside-data surprises, along with heightened market volatility, almost assures that the Fed will not provide any specific guidance tomorrow. Instead, it will probably acknowledge that economic activity has eased but express confidence in the recovery. Powell should confirm that he still expects taper to begin this year, but it is too soon to decide if it should begin in November or December. 

Trading FOMC Rate Decision

 
Quite frankly, November or December doesn’t really make too much of a difference. And if the Fed wanted to be a bit more precise, it could. Trading the FOMC rate decision will be tricky because it is a two-part announcement. At 2 p.m. ET/18 GMT, the FOMC statement, economic projections and dot plot will be released. At 2:30 p.m. ET/18:30 GMT, Powell begins his press conference. If there’s any guidance on taper, it will happen then. 
 
Economic projections and the dot plot will give the first clues as to where the central bank stands. 
 
In July, when the last projections were released, seven policy-makers favored a rate hike next year, with two of those looking for more than one hike.
 
If either of those numbers increase, the U.S. dollar could pop higher. The reaction should be sharp and brief. Inflation forecasts are expected to rise but growth projections should remain unchanged. 
 
Then comes Powell’s presser, which is the wild card. Investors will be disappointed if no precise start date is provided and the U.S. dollar should weaken initially. 
 
However, at the end of the day, if the main takeaway is that the Fed still thinks taper will begin in 2021, a few more months won’t make too much of a difference. If that is the case, we won’t see a long lasting durable sell-off in the U.S. dollar. 
 
The Bank of Japan also meets tonight (before the FOMC), but no changes are expected. Growth is slightly better, but inflation is still very low. The Australian dollar remains under pressure after the Reserve Bank minutes confirmed that the central bank sees interest rates remaining unchanged until 2024, which would put them far behind the U.S., U.K., Canada and New Zealand.
FOMC Preview: Will Fed Give Taper Start Date?
 

Related Articles

FOMC Preview: Will Fed Give Taper Start Date?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email