After the September Fed meeting we heard a bunch a noise from a few Fed Presidents about how they “might” taper their $85 billion a month quantitative easing (QE) program in October, depending on the data. Then the government shut down in October and the data was unavailable. The data that we have seen recently isn’t good.
Two weeks ago we heard from the most hawkish member of the Fed Dallas Fed President Richard Fischer say about QE “I personally would have a hard time arguing for us to dial it back” My personal opinion is that it’s not in play. This is just too tender a moment.” Back in June Mr.Fisher said “We cannot live in fear that gee whiz, the market is going to be unhappy that we are not giving them more monetary cocaine”
When a hawk, like Fisher turns dove and coos “it’s just too tender a moment” it’s hard to expect any cut back on QE.
We expect the Fed to talk about how the government shut down adversely impacted the economy, created uncertainty, slowed down the housing market and that Fed projections are not what they wish or expected them to be.
With those excuses made, the Fed won’t taper. Of course, they will talk about how one day they might. There are always the days after the Fed meetings when its members jet off to foreign monetary conferences to start talking taper again.
Here is a hint what might be in store from the Fed from Chicago Fed President Charles Evans: “We could go on as long as necessary.”