
As the September Fed monetary policy meeting is drawing near, the debate on the FOMC's possible decision to start scaling back the asset purchase program is becoming more and more heated. Recent developments, such as the disappointing August NFP numbers, as well as the ongoing Syrian conflict, have shaken economists' confidence as to whether the QE taper will really be initiated next week.
“With a job market 'far from satisfactory' and a promise to adjust monetary policy depending on economic conditions, it would not be a surprise if the Fed postpones the reduction of monthly asset purchases until the next meeting in late October,” Ilian Yotov suggests. Alexandra Estiot also doesn't expect the Fed to make the move at the upcoming meeting, reasoning that “the likeliness of inflation pressures showing up is close to zero,” which means “the cost, in terms of inflation, of ending QE3 too late is nil, while the benefits, even if very difficult to clearly assess, are positive.”
Despite the doubts about whether the Fed will start reducing QE in September, all of the economists agree with Steve Ruffley that the FOMC “are planning to taper by the end of the year and nothing will change this.”
Some of the analysts taking part in the forecast report still believe however that the slowdown of the monthly asset purchases will be announced at the upcoming FOMC meeting. They believe that the employment data hasn't been that bad (after all the unemployment rate fell to 7.4%) and point out that the Syrian crisis has calmed down in recent days. They also remind that several dovish Fed officials declared their willingness to have an "open mind" about tapering at the September meeting.
Adam Narczewski is the most confident that the Fed will proceed with the QE slowdown, and predicts that it will “reduce its asset repurchase program by 10bln USD.” Valeria Bednarik also allows for such a possibility, stressing however that “a 10/15B taper won't be enough to support the greenback, as most of it is priced in.”
The FOMC will announce its monetary policy decision on September 18 at 18:00 GMT. Below you will find the full forecasts of the contributing economists.
Alexandra Estiot - Senior Economist at BNP Paribas:

Steve Ruffley - Chief Market Strategist at InterTrader.com:

I believe the FED are planning to taper by the end of the year and nothing will change this. Friday’s NFP was not that much of a concern and frankly anything that is not disastrous figure is actually a positive these days. As we don’t know exactly when or how aggressive the taper will be the advice is to carry on buying dips in the stocks as the bonds are only heading one way for the foreseeable future, down."
Ilian Yotov - FX Strategist and Founder at AllThingsForex:

Adam Narczewski - Financial Analyst at X-Trade Brokers, XTB:

Bill Hubard - Chief Economist at Markets.com:

The market is still undecided about the timing and extent of Fed 'tapering' although any move at the FOMC meeting is likely to a be what you might call a 'dovish' taper (ie a reduction) and we are looking for Treasury purchases of $10bn, no change in purchases of mortgage-backed securities and 'dovish' forward guidance on interest rates."
Yohay Elam - Analyst at Forex Crunch:

The notion that the 'Septaper' is coming is strengthened by recent comments from Fed officials, that come with 'an open mind' to tapering in September. This includes the doves. With the Syrian issue somewhat defused, there are very little chances that the Fed will not taper.
QE tapering is not fully priced in, and we could see the dollar strengthening afterwards. A lot depends on the guidance to the next tapering steps, and this remains a mystery for now."
Alberto Muñoz, Ph.D. - Forex Analyst at FXstreet.com:

Valeria Bednarik - Chief Analyst with FXstreet.com:

The day has come, and things are not as good as to be confident the FED will start reducing its bond programs: employment data shown signs of improvement with unemployment rate down to 7.4%, lowest level since Dec 2008, but the feeling is that latest numbers are not enough. Nevertheless, market is now thinking more on 'how much' rather than 'if', as even the ultra doves had announced past week that they will come to the meeting with an open mind regarding tapering. I believe that the FED may announce a reduction in its buying program, but I also believe a 10/15B taper won't be enough to support the greenback, as most of it is priced in. A delay towards year end will likely see dollar nose diving across the board, while a reduction of 20B or more will give the dollar a strong boost higher."
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