Debate now, decide in December
After significant changes in September, we do not expect the Fed to announce any major policy innovations at the October FOMC meeting. Rather, Fed officials will assess the current and projected situation in the economy and debate what actions should follow the conclusion of Operation Twist. Come December, we expect the Fed to extend both MBS and Treasury purchases, on its way to what could eventually be another $2 trillion added to its balance sheet over the next two years. Fed officials also are considering refinements to their communications policies, and there is some chance that they will announce a plan to publish a “consensus” forecast as part of their December forecast update. Details may have likely to wait until at least the minutes in three weeks time.
Read the full report here.