BofA Merrill Lynch Global Research – A US Economics Report – Wednesday, 30 January 2013 – FOMC keeps on truckin’
What a long, strange trip
As we expected, the Fed continued its asset purchase programs at their current pace of $85 billion per month, and maintained the economic thresholds for its forward guidance. In fact, there were few changes to the FOMC statement at this meeting. Despite the December FOMC minutes, which suggested some Fed officials favored ending QE3 “well before the end of 2013,” we expect economic conditions – particularly the labor market – will not improve enough to justify ending QE3 this year for most Fed officials. The minutes, released in three week’s time, may reveal the more dovish nature of the current voting members and push back out market expectations about the likely path for the Fed’s balance sheet.