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BofA Merrill Lynch Global Research – A Global Economics Rates & FX Report – Thursday, 03 January 2013

Fed officials commit to QE but air concerns

The FOMC announced more asset purchases at the December 2012 meeting, but the minutes released today reveal some lingering worries about these actions. About half of Fed officials expressed the view that QE could be scaled back or stopped during 2013. But this view is contingent upon a rebound in growth, and Fed growth forecasts have been over-optimistic in recent years. Additionally, the voters in 2013 will be more dovish than in 2012. As a result, we still expect the Fed will be buying assets around an $85 bn/month pace through the end of this year. However, these minutes do raise the risk of a change before then.

 

 

Read the full report here.