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Currency Analyst since 2010

WSJ: estimating the FOMC outcome

Wall Street Journal correspondent Jon Hilsenrath, an expert on the Fed and its policy, wrote an article on the central bank’s upcoming meeting.

According to Hilsenrath, the improvement in US labor market (job growth averaged 195K a month in the past 12 months compared to 150K a month in the year ended in September 2012 when the bond buying was launched) and economy (better figures, budget deal is to pass Senate this week) is argues for QE tapering this week.

On the other hand, declining inflation argues against tapering: CPI growth is below the Fed’s objective. In addition, the unemployment rate has fallen in part because of people leaving the labor force, while Republicans are preparing for a new fight with President Barack Obama over the need to lift America’s borrowing limit early next year.

According to the WSJ poll, of 43 economists only 11 expected the Fed to cut its bond purchases this week, while 30 said it would wait until early next year.

Image by Kevin Siers

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