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Fed watchers were all wet back in September. Who will get the call right this time?
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Here’s where every major bank stands on whether the Fed will taper

By Matt Phillips in United States

Update: The Fed announced that it would taper, reducing its bond-buying program by $10 billion a month to $75 billion.

Original: At 2:00pm ET today, the Fed will unveil it’s latest decision on what to do about the bond-buying program that it has put in place to try to support the US economy. The toughest call has to do with the so-called taper, the decision to reduce the amount of Treasurys and packages of government-guaranteed mortgages the central bank is buying each month. (It’s currently devouring $85 billion worth of the securities each month.)

Wall Street’s Fed watchers seem a bit more cautious about their calls this time around. After all, virtually everyone on the street—and some informed observers—thought that the Fed would announce a taper at its September meeting. It didn’t happen, and trading desks across global Wall Street were caught off-guard, which really hurt their trading results during the third quarter. (It should be said that the Fed watchers at Bank of America Merrill Lynch got the “no taper” call right in September.)

Anyway, we’ve distilled forecasts from these banks to the clearest, most concise takeaway on their expectations for today’s meeting. (You should just assume that any of these statements are caveated and hedged to the hilt.)

Goldman Sachs

“We currently expect tapering to begin at the March 2014 FOMC meeting, although a January move is very possible. We can’t even rule out a small move this week–which would bring us full circle to our forecast for December tapering at the start of the year.”

Morgan Stanley

“Our US economists expect the Fed to begin tapering at the March 2014 FOMC meeting.”

Barclays

“We expect the Fed to make no changes to its asset purchase program and policy rate guidance. Although better US economic data and the Congressional budget deal last week increased the probability of taper, we believe many on the FOMC require more evidence that the rate of growth is accelerating and inflation is firming before slowing the pace of purchases.”

Credit Suisse

“The FOMC will initiate a small $10 [billion] taper of QE3 soon, perhaps as soon as
[this week’s meeting].”

Deutsche Bank

“We are looking for a $10 billion Treasuries only taper—we have been projecting this since the much stronger-than-expected October employment data (reported on November 8), which was subsequently matched by a similarly strong November employment report.”

UBS

“We believe still-low inflation is likely to preclude a taper at the December meeting as a still-cautious Fed awaits more evidence that recent gains in the labor market and consumption can be sustained while avoiding any action that could derail the holiday shopping season.”

JP Morgan

“We still see January as the most likely date for the first taper, but between January and December it is increasingly looking like a coin flip. “

Citigroup

“The likelihood of a Fed taper announcement next week … roughly 50/50. We think it is very likely that cutbacks in asset purchases will begin either next month or following the January meeting and we continue to expect QE to end in the third quarter of next year.”

Bank of America Merrill Lynch

“CPI inflation continues to be very muted in the US, one factor that we expect will keep the Fed from tapering in December.”