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FOMC James Bullard made an important public appearance after the dramatic NO Taper decision on Wednesday and somewhat eased the dovish notion.

The dollar is still on its back foot from the recent decision, but the fate could gradually change. Here are some the hawkish comments:


The president of the St. Louis Fed did not rule out QE tapering in October and also a currently unscheduled press conference to accompany this meeting.

Many analysts assumed that the Fed will not announce anything dramatic such as tapering in October but rather leave such a decision to either September or December, as there is no planned press conference for October. Bullard changes that notion.

A wise reporter asked Bernanke about this possibility in the press conference, and he also left the door open to a significant announcement by stating that every FOMC meeting is an important one. He also said that some kind of teleconference could called upon.

This comment disappeared in the decision not to taper and in the general dovish notion that Bernanke communicated. But now, Bullard not only repeated the “liveliness” of the October meeting, but also said that a small taper is possible in October.

Close call

The second significant comment was about the discussion: Bullard said that the difference between announcing small QE tapering or no tapering was a “borderline call”. While stating that markets overreacted with taper expectations, he said that his own were 60% in favor for tapering.

This goes to show how close the members indeed were to decide on tapering.

This comment is somewhat amusing: “Difference between no tapering and $10 billion tapering is not a big thing”.

Perhaps the actual difference in bond buys does not make a big difference, but there is a huge difference between keeping the current, very loose policy, and making a change towards tightening.

It is clear that if the Fed announced tapering of $10 billion, we would see a totally different reaction in markets.

All in all, Bullard fired the first shot in the debate towards QE tapering in October, something we can call Octaper. Just 40 days to go.

Further reading:  NO Taper Wrap Up – All the Information