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The probability of stimulus interruption in the US economy grows later this year |  International and Materials

The probability of stimulus interruption in the US economy grows later this year | International and Materials

Although not immediate, The minutes of the last monetary policy meeting show that the Federal Reserve (Federal) is increasingly likely to make formal announcements about cuts in its asset purchasing program.

This is the view of ING international economist James Knightley.

Knightley warns that some participants saw the incoming data as a less clear signal of a fundamental economic pace and would like to see more data in the coming months to make a decision on the matter.

As it is “now on the table”, it’s data that will determine the way forward. And will be a lasting problem, “said the economist.

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Against this backdrop, ING hopes that the pressure to reduce property purchases will increase in the next few months, with the reduction being announced in early September, although today’s minutes point to a higher chance of a formal announcement in December.

“As far as the form it is concerned, we suspect that the majority of members will support the use of the 2013 and 2014 phase model because it is simple and predictable and can be easily expedited if data is guaranteed. Buyers are already starting to back down as MBS is declining and prices are so high, ”says Knightley.

“In any case, mortgage rates respond similarly to treasury yields, so there is no need to overdo the grid building process,” he says.

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