Alroy Commentary – Would tapering start soon?
Fed’s officials indicated they won’t rule out central bank taper its bond-buying program at September policy meeting. Fed’s officials expressed varying degrees of optimism and skepticism that economy is strong enough to thrive without QE. It brings a key question: would Fed start to pull back, or taper, QE in September?
Optimistic officials view the economy is on the upswing. In recent months, economic data showed recovery of U.S. labor market. If the labor market remains strong, market is ready to taper asset purchases. Although optimists were unsure of the timing, but they suggested central bank to reduce QE in last quarter this year.
Some officials show their concern about economy is strong enough to thrive without QE. Skeptics regard jobless rate is overstating the labor market’s health. Unemployment rate fall may partly because people are dropping out of the labor force. They suggest central bank to wait for good data.
It is still an enigma whether Fed start to pull back, or taper QE since September, but it is a critical factor for U.S. economic path in second half year. We will keep attending to the issue, and arrange our portfolios if necessary.
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