The tapering debate is likely to begin at the next FOMC meeting

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In preview of the FOMC meeting next week, “given recent data, the economic projections of FOMC participants are likely to see an upward revision of PCE inflation in 2021 and the dot plot may be approaching a rate hike before the end of the week. 2023, “said analysts from Rabobank. .

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“The Fed is verbally rejecting fears that high inflation is permanent and should underline this in its inflation projections for 2022 and 2023. Today’s University of Michigan consumer survey suggests that the Fed has managed to cut prices a bit. consumer inflation expectations “.

“The discussion on reducing the asset purchase program is likely to start at this meeting, so it will be interesting to hear what Powell has to say on this topic at the post-meeting press conference.”

“The practical problem for the FOMC is to assess whether” substantial progress “has been made on unemployment and inflation, while the data remains highly distorted at least until early September. The unemployment forecast for 2021 may give us an insight. clue to the Fed’s numerical threshold for downsizing. In a situation with data clouded by temporary labor shortages, an early warning signal for phasing out will inevitably be given. “

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