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Flash: Markets seize hawkish tone after FOMC – Deutsche Bank

FXstreet.com (Barcelona) - The FOMC minutes that came later was also viewed to be less dovish than the Fed commentary we've seen recently as the minutes noted that "a number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently stronger and sustained growth".

Markets clearly seized upon the hawkish tone from yesterday's Fed headlines even though the Chairman himself at the Q&A session made it clear that a step to reduce the flow of purchases will not be an automatic mechanistic process of ending the program but rather that any change in the flow of purchases would depend on incoming data and Fed's assessment of the outlook.

According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “Whilst a slowing of QE is possible in a few months we can't help to think that the Fed could be forced to restart its QE in a beggar-thy-neighbor environment where central banks in most part of the developed world are still largely on an easing bias in order to steel a share of the global GDP. We think QE or derivations thereof will be around for many years to come.”

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