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Jakobsen: No taper ”doesn’t come as a shock”
Whilst most analysts are close to flabbergasted by the Fed’s decision to not taper, Saxo Bank’s Chief Economist and CIO Steen Jakobsen, isn’t surprised.
In fact, whilst markets were gearing up for a reduction by USD10 billion of the Fed's monthly asset-buying program, Steen kept warning us that QE was there to stay for quite some time.
He explains there are three main reasons behind his argument. Firstly the US job creation is not real, secondly the country has a very low inflation rate which means its economy is running on excess capacity, and finally we have seen an increase in mortgage rates and government rates.
All this means the Federal Reserve was miscommunicating what was happening and that's why the markets expectations were too high.
He adds that as a result, we could see the other major central banks taking steps to counteract the Feds movements, which means we will see increased volatility in all asset classes.
02:23 minutes
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