Analysts expect US Federal Reserve to be cautious with tapering-report

September 18
7:45 AM 2013

According to a Reuters report, expectations were rife that the US Federal Reserve would be cautious about the tapering of its stimulus package. The US regulator was expected to announce its plans today at 1800 GMT. The report also expected the Federal Open Market Committee (FOMC) to give assurance to investors that interest rates wouldn't undergo a sharp increase soon after the tapering.

Polls done by Reuters had earlier suggested as much as a USD 10 billion cut in the USD 85 billion monthly asset purchases of the Federal Reserve. However, recent data suggested that the cut could be less than expected.

Commonwealth Bank of Australia Currency Strategist Joseph Capurso said he expected the upcoming press conference of Federal Reserve Chairman Ben Bernanke to be dovish. "The Fed will want to temper market expectations that tapering will be rapid or that FOMC participants have brought forward their expectations for the first increase in rates. While the dollar may soften after the FOMC meeting, our medium term view of a stronger dollar is unchanged," he added. 

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