Fed taper starting to look more distant

During today's testimony, FED chair Powell has ruled out any changes regarding current pace of asset purchases. Powell's view seems to be close to Evans, who points out that the Fed needs to achieve its goals as soon as possible and that premature tapering could delay the process. Moreover, Evans sees a possible interest rate hike in 2024. It is worth remembering that the median of expectations points to 2 rate hikes in 2023. This suggests that Powell may not be among the "dots" that indicate faster moves regarding policy change.

Of course, a lot will depend on the data that may change the mood among central bankers. If the upcoming labor market readings show no significant improvement, and inflation does not suddenly increase by let say 50% or 100%, then September seems to be an unlikely time to announce the QE tapering. On the other hand, a Jackson Hole symposium will be held in August, where such an announcement could take place...

US500 did not experience any panic sell-off today. Recent weakness could be ascribed to general profit taking. Source: xStation5