Talking About Tapering Or Not?

It’s time again for another FOMC meeting. This one is set to be quite interesting, as Federal Reserve chair Jerome Powell has some explaining to do on the inflation and tapering fronts.

The markets are not expecting any changes to the FFR or its QE program at the meeting. It should also be no surprise that the bank will continue to try and signal a very patient stance on rates and tapering going forward.

Thus, the focus points for this meeting will be on three things: [1] Summary of Economic Projections; [2] Potential changes to alleviate money market concerns; and [3] Talking about talking about tapering.

On the economic projection side, the main focus will be on the Dot Plots and whether the median shows a possible hike for 2023 or not. On the money market side, questions remain on whether the Fed will potentially hike the Interest on Excess Reserves (IOER) to alleviate money market concerns.

Then on the tapering side, the Fed Chair won’t be able to stick to his previous comments that Fed officials haven’t been talking about tapering, because we now know they have. So language around those discussions will be in focus.

We’ll go through all of that in this week’s video.