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20 Jun 2013
Flash: US not strong enough for Fed tapering off near term - Rabobank
FXstreet.com (Barcelona) - After Bernanke met with the press following the FOMC and exposed his views on monetary policy, Philip Marey, Senior US Strategist at Rabobank, sees that on balance, economic data is not strong enough to warrant tapering off QE3 in the near term.
Marey only expects the economy to re-accelerate in Q4 after the fiscal landscape has cleared up, "an occurrence that should induce the Fed to slow down its asset purchases at the turn of the year and terminate QE3 altogether in 2014" Marey notes.
The ongong volatility in longer-term US treasury yields should stay, Marey believes, based on the fact that "amplified uncertainty caused by FOMC divergence and mixed economic data is likely to continue in the coming months" the Strategist says.
With regards to the 0.00-0.25% target zone for the federal funds rate, "is expected to remain in place well into 2015, upward pressure on short-term rates should be much smaller" Marey concludes.
Marey only expects the economy to re-accelerate in Q4 after the fiscal landscape has cleared up, "an occurrence that should induce the Fed to slow down its asset purchases at the turn of the year and terminate QE3 altogether in 2014" Marey notes.
The ongong volatility in longer-term US treasury yields should stay, Marey believes, based on the fact that "amplified uncertainty caused by FOMC divergence and mixed economic data is likely to continue in the coming months" the Strategist says.
With regards to the 0.00-0.25% target zone for the federal funds rate, "is expected to remain in place well into 2015, upward pressure on short-term rates should be much smaller" Marey concludes.