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Little Opposition To 2021 Taper Decision...But How Fast?

FED

MNI's current state of play on where FOMC members stand on taper strategy:

  • Prior to the July FOMC, 8 of 18 participants said they see potential for the beginning of asset purchase tapering by end-2021: Kaplan, Rosengren, Bullard, Bostic, Harker, Waller, Daly, and Evans.
  • Given comments since the July FOMC, none has changed their mind, and in fact there aren't really any comments that suggest that any member is opposed to such a timeline. Even arch-dove Kashkari says it might be appropriate after "a few" more good jobs reports.
  • Some are angling more strongly for an early taper start date and conclusion to asset purchases. At least five see/imply net asset purchases ending around mid-2022: Kaplan, Rosengren, Bullard, Bostic, and Waller. That implies either an early start (ie September/October), and / or a faster pace of tapering than seemingly most of the Committee. A 'straight' taper ($10B Tsy / $5B MBS per meeting / month) reduction would imply an 8-month timetable (Kaplan has made this point).
  • Rosengren is looking for reducing MBS and Tsy purchases by equal quantities, meaning that MBS buys would end before Treasury purchases. Bullard is looking for $20B Tsy / $10B MBS per month reductions with taper ending by March 2022.


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