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JPM FOMC Review: Fed Sees Less Risk, But Still "Some Time" Before Taper

FED

JPM notes that despite the Fed sounding a more upbeat at the April meeting, it "gave no signal that it was inching toward tapering", with Powell's opening statement unchanged on the subject of asset purchases.

  • "The apparent contrast between the more upbeat outlook and the unchanged signaling on asset purchases may be due to the outlook improving about in line with the Fed's expectations."
  • JPM notes that Powell took a "relaxed stance toward the inflation outlook" and that this may be explained by his "Yellen-esque optimism on labor supply", i.e. labor supply issues are likely transitory.
  • The first time the FOMC can have any serious discussion about tapering is the June meeting; that would make a taper this calendar year hurried, so JPM expects a taper in early 2022.
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