From the Wall Street Journal’s Jon Hilsenrath over the weekend: Forget Fed-Speak, Look for the Latest Growth View (The Wall Street Journal is often gated, so if you’re unable to access the article try a search of Google news using the headline)
Says
- Fed officials are unlikely at this (week’s) meeting to change their $85-billion-per-month bond-buying program
- But what they say about the economy will send important signals about what they expect to do in the future
The article goes on:
- The Fed’s forecasts for the economy are more optimistic than consensus
- The Fed’s latest growth projections for GDP (made in March) average 2.6% for 2013 and to 3.2% for 2014, compared to a Wall Street Journal survey of economists at 2.3% this year and 2.8% for 2014
Says Hilsenrath (the article is co-written with Phil Izzo):
- If the Fed “maintain confidence in their economic forecasts, it could signal they think they’re on track to begin pulling back the program later this year”
So, what Hilsenrath/Izzo is saying is to watch the economic projections made by the Fed as an indicator of when the winding back of asset purchases is likely to begin.
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Current market talk has the scaling back likely to begin in September of December; it is data-dependent, of course, currently December seems the more likely alternative.