After Monday's market turbulence, the Fed's challenge will be to sound reassuring while acknowledging it is getting ready to move away from its easy policy.
had its worst day since May, but on Tuesday stocks stabilized a bit as investors looked to the Chinese government to contain the situation.
He expects the Fed to cut back the purchases at a pace of $10 billion Treasurys and $5 billion mortgage-backed securities a month, once it starts the taper."By and large, the tapering is probably not a market moving event," said Anwiti Bahuguna, head of multi-asset strategy at Columbia Threadneedle.
Also in their June forecast, Fed officials targeted the first two increases to the fed funds target rate in 2023, but there's a risk that could change. Two officials had expected the first hike in 2022, and many market pros are betting on a hike by the end of next year. "I still think they can taper and leave a window, an option for them to move and start to raise rates in 2022," Rieder said. "I do think they will delink the taper from rates, but that will provide them the optionality to actually be able to go in 2022, assuming employment continues to improve … But I don't think they in any way, shape or form transmit that that's their base case, by any stretch.
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