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28 May 2013
Flash: What is the outlook for Fed policy? - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts have asked, “What is the outlook for Fed policy?”
They begin by noting the dramatic market reaction notwithstanding, they think Bernanke and the FOMC minutes were clear. Bernanke essential said “no” to calls from some members to consider scaling back on the long-term asset purchases at next month's meeting. They feel that this meeting it is too early, and he and the majority of the FOMC needed several more months of data to make that determination, and “when that determination is made, we are talking about the pace of QE, not terminating it.” In addition, they note that the Fed and some economists argue that the accommodation of QE lies in the stock of long-term assets that the central bank keeps off the market, not so much with the flow of purchases.
They begin by noting the dramatic market reaction notwithstanding, they think Bernanke and the FOMC minutes were clear. Bernanke essential said “no” to calls from some members to consider scaling back on the long-term asset purchases at next month's meeting. They feel that this meeting it is too early, and he and the majority of the FOMC needed several more months of data to make that determination, and “when that determination is made, we are talking about the pace of QE, not terminating it.” In addition, they note that the Fed and some economists argue that the accommodation of QE lies in the stock of long-term assets that the central bank keeps off the market, not so much with the flow of purchases.