Fed's Clarida: May be appropriate in December to discuss speeding QE taper
|Vice Chair of the FOMC Richard Clarida said on Friday that it "may very well be appropriate" to discuss accelerating the pace at which the Fed is winding down its bond-buying programme at the December policy meeting. Speaking at the San Francisco Fed's 2021 Asia Economic Policy Conference, he added that there are upside risks to inflation, that the economy is in a very strong position at that it looks as though Q4 is going to be very good.
Market Reaction
The Dollar has seen some modest strength in recent trade after Clarida alluded to an accelerated pace of QE taper. Clarida is seen as the Fed's most important "thought leader" given that he is actually an economist by trade, versus Fed Chair Jerome Powell being a lawyer. If he is open to the idea of an accelerated QE taper, it is much more likely to actually happen. Fed Governor Christopher Waller called for an accelerated QE taper earlier in the session and St Louis Fed President, who is a 2022 voter, called for the same earlier in the week.
Bost suggested doubling the pace of QE taper to $30B per month, meaning the taper would end in April. An earlier end to the QE taper would bring forward when the Fed would be able to lift interest rates. Hence, short-end US yields have risen in recent trade; US 2-year yields are now flat on the day at 1.50% having been as low as 0.45% earlier in the session.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.