19 Sep 2013
Flash: FOMC was an extremely dovish meeting - Westpac
FXstreet.com (Barcelona) - After the shocker of 'no taper' by the Fed, Sean Callow, FX Strategist at Westpac, defines the outcome of the meeting as extremely dovish, which translates into very bearish prospects for the US Dollar near term.
Key Quotes
"In the press conference, Bernanke was very equivocal when asked whether the plan to slow purchases "later this year" and to be complete by the time the unemployment rate hits 7% was still operational. His response was that it is still "possible" but he added that, "there's no fixed calendar schedule". "
"He also played down the 7% unemployment rate as an "indicative" figure. The call to taper of course remains data dependent and expectations will now gravitate towards a slowing in asset purchases in December but Bernanke's comments open the very real possibility that asset purchases could be maintained at $85bn per month into next year."
"The Fed's first set of projections for 2016 show no rush to tighten policy. Many had fretted that the Fed's first stab at 2016 would surely show a federal funds rate that was approaching the Fed's longer term forecast of 4% given their forecasts for 2015 were already suggestive of an economy that was approaching "normality"."
"In the event a fed funds rate of 2% was the favoured projection for the fed funds rate in 2016. That represents a strong affirmation of the Fed's low rates for longer pledge. In short, it was an extremely dovish meeting."
Key Quotes
"In the press conference, Bernanke was very equivocal when asked whether the plan to slow purchases "later this year" and to be complete by the time the unemployment rate hits 7% was still operational. His response was that it is still "possible" but he added that, "there's no fixed calendar schedule". "
"He also played down the 7% unemployment rate as an "indicative" figure. The call to taper of course remains data dependent and expectations will now gravitate towards a slowing in asset purchases in December but Bernanke's comments open the very real possibility that asset purchases could be maintained at $85bn per month into next year."
"The Fed's first set of projections for 2016 show no rush to tighten policy. Many had fretted that the Fed's first stab at 2016 would surely show a federal funds rate that was approaching the Fed's longer term forecast of 4% given their forecasts for 2015 were already suggestive of an economy that was approaching "normality"."
"In the event a fed funds rate of 2% was the favoured projection for the fed funds rate in 2016. That represents a strong affirmation of the Fed's low rates for longer pledge. In short, it was an extremely dovish meeting."