Market watchers expect the minutes of last month’s FOMC meeting to confirm and clarify Federal Reserve officials’ inclination toward slowing its quantitative easing program.
The minutes will be released at 2:00 p.m. ET today.
Given the market’s negative reaction after the June 19 press conference — where Chairman Bernanke indicated the Fed might taper asset purchases if certain growth criteria were met.
Paul Dales and Paul Ashworth of Capital Economics will be looking for clues regarding how recent economic data will be weighted.
In particular, the markets will be looking for anything to substantiate the hint provided in a recent speech by Fed Governor Jeremy Stein that the tapering may begin in September. Stein also suggested that the Fed will not place too much emphasis on the data released between now and September, preferring to base the tapering decision on all of the data released since QE3 was launched late in 2012. That appears to contrast with the signal Bernanke sent at the press conference after June’s meeting that tapering very much depends on the evolution of the incoming news. The minutes may shed some light on the extent to which tapering this year is a done deal.
Eric Green at TD Securities, however, believes robust June job gains will only bolster the Fed’s confidence in a fall taper.
Experts have converged on September as the expected tapering announcement.
Eyes will also be on whether Bernanke strikes a more dovish tone in his speech today at a National Bureau of Economic Research Conference.
While Bernanke’s speech this afternoon certainly sounds more professorial than policy-inspiring (it’s titled “A Century of U.S. Central Banking: Goals, Frameworks, Accountability,” after all), market watchers will nonetheless look for any indication — implicit or otherwise — of the taper timeline and quantity.
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