August 26, 2021
The Kansas City Fed hosts its annual Jackson Hole meeting this week, where the top policymakers convene to discuss the future of monetary policy. Many in the financial world are expecting a policy announcement at the end of the week (Friday) about the future of tapering. JPMorgan analysts say not to expect the tapering to come until December and that nearly $1 trillion in stimulus will be pumped into the economy in the meantime. Too many investors are looking too far ahead and overlook the effects of that liquidity in the interim. Even if the Fed pushes up the tapering to November it will only be about $120 billion less, still a sizable injection of $850 billion. Still, markets showed their weakest performance on days when the Fed minutes merely mentioned tapering. JPMorgan also weighed in on Powell's future saying there is a significant chance he won’t be renominated in February 2022.
FINSUM + Magnifi: It doesn’t look like that the Fed will take their foot off the pedal before December and we believe tapering in November seems unlikely. The December timeline aligns with many voting members' decisions.
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