Fed hints at near-term tapering, under conditions

Fed hints at near-term tapering, under conditions

In its latest statement and press conference, the Federal Reserve said that it will likely begin reducing its monthly bond purchases as soon as November while implying that rates will begin to go higher sooner than originally anticipated.


The move came in response to overall improving conditions including stronger employment data and a very high expected inflation rate of 4.2%, more than double the original 2% target rate. Furthermore, 9 of the 18 members expressed readiness to increase rates next year to keep inflation in check.


Fed Chair Powell also mentioned that tapering will depend on a “reasonably strong” jobs report. In other words, the hawkish mood of the Fed created more flexibility for September’s employment data which is set for release in the first week of October.


Future inflation is expected to overshoot slightly according to the Fed with figures of 2.2% for 2022 and 2023 and 2.1% for 2024. The Fed has to balance between risks from the pandemic which remains moderate, possibly leading to shaky economic conditions which could affect employment, and sudden bursts of higher inflation.


The reaction was relatively mild, seeing the Dollar gaining against other major currencies before starting to reverse earlier today. The Euro traded in the mid-1.1700s against the Dollar before dipping towards 1.1690. The British Pound moved close to 1.3600 against the Dollar but looks stronger again this morning. Gold briefly approached 1790 before reversing lower and now trades around 1760s.


US equities turned volatile but remain on course to recover higher nearly 3 weeks of weak downside action. Dow Jones trades near 34400s, off from recent lows of 33600s.


According to analysts, future data that comes out better than expected for the Dollar could see a rush towards the currency as people begin anticipating long-term rates to go higher and the return of the carry trade.


With CFI, you can trade thousands of CFDs on Stocks, Forex, Commodities, Indices, and ETFs from one single platform. If you are new to the financial markets, you can start with a risk-free demo account and for the more seasoned traders, opening a real account is a straightforward process that requires very little time. CFI offers its clients many services and features including free daily webinars, dedicated account managers, daily technical reports, and highly competitive conditions that include fast execution and spreads from zero pips.


Click here to find out more.


The content present in this article reflects the opinions and views of the author and does not necessarily reflect the position of CFI. The material published on this blog is provided for informational purposes only and should not be considered as investment advice. The Company is not responsible for the decisions and choices of the investor who has full and free will to make decisions that they see appropriate upon the investor’s sole discretion.

CFI Financial Group is an award winning global financial markets provider with over 23 years of experience and regulated entities in several jurisdictions, focused on offering impeccable execution and trading conditions including very low spreads, professional services, dedicated support and powerful tools.
CFI Financial Group has regulated subsidiaries in
London • Larnaca • Beirut • Amman • Dubai • Port Louis
Credit Financier Invest - CFI LEBANON
BDL no. 40
Ellipse Center 3rd floor, Charles
Malek Avenue, Achrafieh

CFI provides execution-only services and does not provide any investment advice. To make an investment decision, you cannot rely on the content of this website, or on any information, opinion, report or other materials (“Information”) you receive from CFI, or its representatives. Such Information is general and does not consider your objectives and your financial situation, thus they shall not be considered in any way as an express or implied promise nor a guarantee of any profit or limit of loss. CFI shall not bear any liability in case you used or relied on such Information. Please ensure that you make your own research and seek independent advice if necessary.

Forex and CFDs are leveraged products that incur a high level of risk. A small adverse market movement may expose the client to lose the entire invested capital. The majority of retail client accounts lose money when trading in CFDs. Please be aware of trading risks and that you could sustain a loss exceeding your deposited funds, even if a stop loss is used.

CFI Lebanon is regulated by the Banque du Liban and the Capital Markets Authority

The Best Online Financial Trading Services, Middle East, 2020
Entrepreneur Magazine

Please publish modules in offcanvas position.