Reuters Poll: Fed to announce QE taper in Aug or Sept on rising inflation concerns

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Following the strong inflation prints from the US, published the previous day, Reuters came out with a survey of over 100 economists to say, “The Federal Reserve (Fed) is likely to announce in August or September a strategy for reducing its massive bond-buying program, but won’t start cutting monthly purchases until early next year.”

“Booming demand with the U.S. economy reopening is expected to continue and push up consumer prices this year, with the June 4-10 Reuters poll of over 100 economists showing an upgrade to both growth and inflation forecasts,” adds Reuters.

The poll results also quote James Knightley, chief international economist at ING as saying, “We expect to hear clear hints at the Jackson Hole conference that the Fed is now discussing the merits of QE tapering and this will be developed further at the September FOMC which is just four weeks later.”

It was also mentioned that among those who ventured a guess by how much monthly bond purchases would be reduced gave a median forecast of $20 billion, evenly split between Treasuries and mortgage-backed securities (MBS). Individual answers were as high as $40 billion on Treasuries and $20 billion for MBS.

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