The Federal Open Market Committee meeting, which began yesterday, ended with the release of the Federal Reserve’s statement on monetary policy.
The Fed is indeed in a conundrum.
While Economic growth has likely peaked, but inflation continues to run hot, putting pressure on the central bankers to thread the needle by convincing investors that it has everything under control.
So Fed Chair Jerome Powell is not considering cutting its purchases of mortgage-backed securities before its overall tightening process begins. “There is little support for idea of tapering [mortgage-backed securities] earlier than Treasurys,” Powell said.
But Powell did say that there was some support for tapering the mortgage-backed securities at a faster rate than Treasurys, once the process begins.
Economist says Fed has ‘started the tapering clock’
PNC Chief Economist Gus Faucher weighed in on Powell’s remarks and the Fed’s July monetary policy decision, saying the central bank has effectively begun the countdown to tapering.
“With its July 28 statement, the FOMC has started the tapering clock. The committee said that the economy has made progress toward its goals of full employment and inflation averaging 2% over the longer run, but not the ‘substantial’ further progress that it is looking for before it begins to reduce its purchases of long-term assets,” he wrote. “The statement also said that the committee will continue to assess progress toward these goals at future meetings.”
What does the Fed’s decision mean for investors?
Are we slated for a major correction? Or does this present buying opportunities?
If so, which sectors should be the key areas of focus?
We should also be asking questions with these key investing themes in mind: Inflation, Risk, Transition & Growth.
Join us in this upcoming Summit where we try to find the answers from these esteemed speakers.
View the professional profiles of the speakers here: https://global-market-outlook-2021.heysummit.com/speakers/
This is THE Summit you wouldn’t want to miss!
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