Two Fed Members Suggest that “Tapering” Could Start Before March 2014
Yesterday, two Fed members gave their opinions concerning economic situation and monetary policy.
New York Fed president William Dudley (dove, FOMC voter) believes that the economic fundamentals of the US are looking increasingly good. He notes that although growth in 2013 has been disappointing, it will pick up in 2014 and 2015. Moreover, he underlines that inflation is likely to rebound while more substantial improvement in labor market is coming.
In the same time, Philadelphia Fed president Charles Plosser (hawk, FOMC non-voter) urges the FOMC to start “tapering” at the next meeting and to announce a fixed amount of assets that it intends to purchase as part of QE3.
As a consequence, these two speeches suggest that “tapering” could occur before than expected (March 2014).
Note that all Fed members’ speeches concerning QE and economic activity since the September FOMC meeting are available here.