What investors need to know about a potentially faster Fed taper

What investors need to know about a potentially faster Fed taper

the main takeaway for investors from fedchair powell’s comments yesterday beforesenate banking has to beit’s now the default position of the fedat his december meeting to discuss andlikely enact a faster pace of taper oras jp morgan calls it the turbo taper infact jp morgan writing this it now lookslike it will take a deterioration in thevirus conditions to prevent the flmcfrom deciding to quicken the pace oftapering at the next meeting that’sdecember 14th and 15th of course so nowit’s up to the new variant to prove it’sbad enough to dissuade the fed powell’scomments came along with the fed chairretiring the word transitory to describeinflation and otherwise raising hislevel of concern over prices so whatdoes this look like well roughly every

five billion dollars increase in thetaper announcement would bring forwardthe end of the fed’s 120 billion dollarsin monthly asset purchases which aredesigned to help bring down interestrates so if it doubled from the currentpace of 15 billion to 30 the fed wouldend the asset purchase around februarywith a little bit left over instead ofmay i think that may be the odds onchoice here that the fed doubles it butfaster taper of course raises thepossibility of quicker rate hikes butit’s worth noting commodities includingoil have all declined sharply so bothwith the new virus care and withpowell’s comments soit could be that a faster taper will dosome of the heavy lifting andcontrolling inflation limiting

how fastrate hikes come or how far they have togo andrewwere you surprised that he hethrew in the towel on the wordtransitory after all this timeno no i think he’s been going there thatthat was not my surprise my surprise wasthat he didn’t wait a month beforedeciding uh on the faster taper i wentback and looked at the transcript andrewi want to find the exact words that heused but he said at the last meetingremember that last meeting was only inthe beginning of november he said we’reprepared to speed up or slow down thepace of reductions in asset purchases ifit’s warranted by changes in

the economic outlooks you have to say youknow what happened over this last 30days that the fed would would really uhbe on a course to change its policymaybe even double the rate of taperingyou did have a strong inflation reportthat showed wider inflation but thequestion is why didn’t the fedanticipate that and then the omicronthing came along and i thought you knowthe fed is on a course to speed up thetaper i just didn’t think it wouldhappen so quickly

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