Reuters Poll: Fed to unveil bond-buying taper plan next month

Despite mixed concerns over the reflation fears, the latest poll of 43 respondents, unveiled by Reuters, said, “The Federal Reserve will announce a plan to taper its asset purchases in September.”

The survey also mentioned that the US jobless rate would remain above its pre-pandemic level for at least a year.

Key quotes (from Reuters)

Nearly two-thirds of respondents, 28 of 43, said the Fed is likely to announce a taper of its asset purchases - currently set at $80 billion of Treasuries and $40 billion of MBS per month - at its September meeting.

None of the respondents said it would be announced at the Fed’s central banking conference in Jackson Hole, Wyoming, this month, compared with the more than one-quarter who said in a June poll that it would.

The poll concluded the Fed will start with monthly reductions of $10 billion in its purchases of Treasuries and $5 billion in those of MBS. Some responses were as high as $20 billion for both Treasuries and MBS.

U.S. inflation data for July, which was released this week, suggested to many that price pressures may have already peaked in the world’s biggest economy.

The poll showed GDP growth slowing to 4.2% in 2022 and 2.4% in 2023 despite the Senate’s passage of a $1 trillion infrastructure bill on Tuesday and the start of a debate on a separate $3.5 trillion spending blueprint. 

FX implications

The poll findings weigh on the market sentiment and underpin the US dollar’s safe-haven demand. That said, the US Dollar Index (DXY) remains firm at around 93.00 whereas the S&P 500 Futures drop 0.07% intraday by the press time.