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Fed tapering: Why did markets get it wrong?
Markets have branded the Federal Reserve’s decision to not taper as “shocking”, “surprising” and “unexpected”. Before the US Central bank met this week, analysts were pretty sure it would reduce its asset-buying programme by about USD 10 billion. So how did they get it wrong?
Juhani Hupainen, a blogger for Tradingfloor.com, thinks the markets are “not that stupid”, and that this would have more to do with the Fed "failing to communicate what was happening".
He also adds that the Fed has clearly seen the recent developments in the markets and "they could have been even more clear" that tapering would be data driven.
Fed Chief Ben Bernanke first floated the idea of tapering back in May. But now Juhani says there is no reason for the Fed to start tapering, apart from the fear of a bubble. If it does, however, it won’t be before 2014, but then again he adds "there might be other developments that hinder it from happening then as well".
You can find more of Juhani’s articles and analysis here:
http://www.tradingfloor.com/traders/juhani-huopainen
01:16 minutes
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