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The FOMC is likely to use the January meeting to reflect on developments over the previous six weeks and assess how they may impact the medium-term economic and monetary policy outlook. But there is little reason to expect the Fed to signal a change of course at this meeting, particularly when it comes to slowing the pace of its asset purchases - as Chair Powell put it earlier this month, "now is not the time to be talking about exit".
Indeed, the main talking point in January has been the Fed's tapering intentions, and expectations for the timing of a taper are beginning to subtly shift forward. We have seen sell-side analysts increasingly eye end-2021 for a potential taper alongside upgrades to inflation and growth forecasts since the beginning of the year. And some FOMC participants have openly speculated that a taper by end-2021 is possible.
But Chair Powell and other key Fed members have batted away speculation of such an early taper, and absent extraordinary upside surprises in the labor market and inflation, the Fed will almost certainly remain cautious on tapering for the next few FOMC meetings at least.
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Correct to the best of MNI`s knowledge as of Jan 25