There is little point for the Fed to continue the current pace of purchases. A delay in tapering is not going to reduce long-term interest rates because everyone knows it’s coming – and soon. In addition, if the Fed reduces QE3 by $10 billion (forecast) from $85 to $75 billion a month, the general effect of QE won’t change much.
There may be no better opportunity for tapering in the next couple of months. A monthly increase of 169K jobs may be as good as it gets until economic growth accelerates.
The Fed’s subsequent meeting on Oct. 29-30 could very well coincide with negotiations over an increase in the debt ceiling and the announcement of the next Fed chairman – that’s already a big agenda.
The Fed will want to avoid market disruptions in the face of reduced mortgage and Treasury issuances.
An indefinite delay in a U.S. response to Syria’s use of chemical weapons.