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Forex Flash: QE3 to end around the turn of the year - Rabobank

Ben Bernanke testified earlier on Tuesday in his semiannual Monetary Policy Report before the Senate Banking Committee and as main remark, market watched how Bernanke put 'hawkish back in cage' after tempering last FOMC minutes somehow bullish.

According to the Rabobank Analyst Jan Lambts , today's today’s testimony suggests that the doves still rule the FOMC. In the middle term, however, Rabobank expects the end of QE3 late in 2013. "Since we expect the US economy to re-accelerate in the second half of the year, after the fiscal deadlines have passed and the impact of the payroll and income tax hike, and the impact of the automatic or more deliberate alternative spending cuts have faded, we expect to see the end of QE3 around the turn of the year."

"However," continues Lambts, "given the increasing interest the Committee is showing for the risks of its unconventional policies, we may see the Fed slow down the pace of asset purchases from its current $85bn/month at an earlier stage."

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