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ABN Amro's assessment of the June FOMC: The....>

FED
FED: ABN Amro's assessment of the June FOMC:
 The asset purchase announcement replaces the previous whatever-it-takes type
guidance - still leaving upward flexibility, but giving assurance to the market
that asset purchases would not dip below $120bn per month. For comparison, at
the peak of QE3 the Fed was purchasing at a $85bn monthly pace.
- Given that the balance sheet has already expanded by $3trn since early March,
this is an strong commitment, in our view.
- Only Q is, how long these purchases might be sustained; "coming months" is
vague and likely reflects high degree of uncertainty in the outlook. But strong
signs Fed feels significant additional accom needed.
- Powell was more cautious than expected on YCC; while confirming it's under
active discussion, he also said that 'whether to use yield curve control is
still an open question', suggesting decision not imminent.
- We suspect the Fed judged the floor under asset purchases would send a
sufficiently strong signal for the time being, and that yield caps would
potentially be more useful later in the year.

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