28-Jan-2014, GMT 14:05
The closer to Wednesday FOMC meeting, the more speculations over the outcome arise. Most of big banks thinks that pace of tapering will be kept at unchanged levels and FOMC will subtract another 10bn USD from QE amounts. What is highlighted is that forward guidance may be subject of some adjustment. Now when Unemployment Rate fell to 6.7% mainly due to weakening of labor participation rate, many analysts asks question if 6.5% threshold is still valid. One possibility is that Fed will lower this threshold upon very mixed data that came earlier this month. Other option – one that Morgan Stanley outlines – is that Fed may express easy approach on the unemployment threshold therefore lowering its significantly its importance.
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