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FOMC: Fed to complete taper, no clear date on rate hikes - FXStreet

FXStreet (Bali) - Valeria Bednarik, Chief Analyst at FXStreet, notes that the Fed is likely to trim the last $15B of its facilities programs on Wednesday, adding that no major clues on the timing of the tightening cycle are expected.

Key Quotes

"The main event of the week will be no doubts FED monthly economic policy meeting next Wednesday, when the US Central Bank is expected to trim the last $15B of its facilities programs. The market will be eager then to know what’s next, and when that will happen. I seriously doubt Mrs. Yellen will come with a certain date for the next logical step: a rate hike"

"The thing is that with inflation subdue, and the general slowdown among the major economies, it won’t be easy for the Central Bank to return to normal. Even more, some of FED members had been suggesting the FED may not tapper those last $15B next week: FED’s officers are concerned that if inflation weakens further, they might need even to revive QE; and while odds of such happening are limited and against their latest forecast, the scenario should not be disregarded."

"Highly unlikely, such action should trigger a run in US indexes, but a strong slide in greenback alongside. Taper with no clear date for a rate high will have a minimum impact in the forex board, while a certain date or a hawkish tone in the statement, also hardly possible, should boost the dollar and triggering selloffs among indexes."

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