FOMC Preview: All About Taper Timing
(2 min read)
Market focus ahead of Wednesday’s FOMC meeting is the timing of taper.
No details are expected yet with the focus instead on the incomplete recovery, particularly in the labour market.
Watch for Powell to repeat his recent comment that the economy is at an ‘inflection point’.
This FOMC meeting will likely be fairly quiet. The Fed will probably anchor to their sentiment of the March SEP meeting. One of the key messages from the March meeting was that the growth outlook is extremely robust. But for now, that means very little for policy because the Fed’s reaction function is outcome not forecast based. This is a message the Fed has driven home explicitly so far this year. The market narrative entering the April meeting will be all about the timing of taper. And while the Fed language has indicated progress on ‘substantial further progress’, the focus of the April meeting and press conference will remain on the incomplete recovery given the 8-9mn jobs still missing.
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