Someday Soon! Fed Does Nothing But Signals That Tapering Would Begin “Soon” As In 2022

Judy Collins could have sang today’s Fed announcement. All they said was “Someday soon.”

Federal Reserve officials signaled they would probably begin tapering their bond-buying program soon and revealed a growing inclination to start raising interest rates in 2022. 

If progress toward the Fed’s employment and inflation goals “continues broadly as expected, the committee judges that a moderation in the pace of asset purchases may soon be warranted,” the U.S. central bank’s policy-setting Federal Open Market Committee said Wednesday in a statement following a two-day meeting.   

The Fed also published updated quarterly projections which showed officials are now evenly split on whether or not it will be appropriate to begin raising the federal funds rate as soon as next year, according to the median estimate of FOMC participants. In June, the median projection indicated no rate increases until 2023.

Rates remained the same.

Dots? Liftoff projected for 2022.

The redline version of today’s speech.

Powell said that balance sheet tapering could begin in November. Agency MBS purchased by The Fed is still growing!

Reaction in Treasury markets? The 30Y-5Y curve dropped below 100 bps.

After that nonsubstantive meeting, The Fed FOMC members are probably headed down to a nightclub.

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