The September FOMC minutes revealed a notable divide between those Fed officials who wanted to taper in September and those who preferred to wait. While a number of participants were in the former group, most voting members apparently were in the latter one. For them, the combination of weaker data and greater risks led them to maintain the current purchase pace. In our view, the realization of fiscal shock fears is likely to postpone any tapering until January or beyond. The minutes highlighted the data dependence of Fed policy and the need for evidence of “continuing improvement” before tapering begins.
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