Fed’s George (2022 voter) says the Fed should start on QE tapering this year; there has been good progress on the economy, inflation is coming in strong and suggests an opportunity to dial back QE but haven't seen the labour market fully recover

• Less precise on dates regarding tapering; communication in September meeting will reflect discussions on taper


• Will see strong employment growth into next year


• There was not an intent going in to buy mortgage backed securities directly related to the housing market, but understand that it [the housing market] is looking particularly frothy - via Fox
  

Analysis details (12:34)

• Full Jackson Hole Symposium Preview available here


• There seems to be a consensus developing that the tapering process will be announced in September or November, beginning either at the end of this year or start of 2022. With this landing zone largely accepted, a key focus will be on the tapering process itself: at what rate will the Fed taper (many desks think around USD 15bln/month), over what time period (many think it will take a year or so), and what the composition of the taper will be (many think that MBS and Treasury purchases will be rolled-back proportionately; if we assume USD 15bln/month, that might imply tapering of USD 10bln of Treasuries and USD 5bln of MBS per meeting, if the tapering is indeed in proportion to the current rates of buying). Many of these questions will not be fully answered at Jackson Hole, and analysts suggest it is more likely that they will be revealed after the Fed has announced its intention to taper. Goldman Sachs' analysts, who are in line with this developing consensus, think that it is the FOMC's intention to formally announce the start of tapering at the November FOMC meeting, assigning a 45% probability, though have also assigned a 35% chance of a December announcement, with a 20% chance that it could be delayed until 2022. "We put high odds on a delay beyond November because of the downside risk posed by the Delta variant," Goldman writes, "we expect Powell to acknowledge both the strong employment gains in recent months and the downside risks posed by the Delta variant, and this would keep expectations on track for a potential September warning and November taper announcement, but would carefully avoid locking the FOMC into that timeline.

26 Aug 2021 - 12:32- Fixed IncomeImportant- Source: BBG TV