FOMC – Powell will err on the side of removing accommodation too slowly rather than too quickly #AnirudhSethi

The Federal Open Market Committee statement and Powell’s press conference on Wednesday US time were both non-eventful.

Responses are coming in, this a quick summary on what Oxford Economics have to say:
Powell signalled the FOMC would rather risk erring on the side of removing accommodation too slowly then removing it too rapidly, for several reasons:
  • heightened uncertainty around the pandemic remains
  • the economy and labour market are far from full recovery
  • new policy framework is asymmetrically dovish
  • policymakers want to avoid ‘taper tantrum’ that would send long-term rates higher

Oxford Economics forecast is for a ‘gradual’ QE taper to being in 2022. but by the end of that year, the Fed’s open market account will remain very elevated.
The Federal Open Market Committee statement and Powell's press conference on Wednesday US time were both non-eventful.