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The Fed’s credibility test
It’s the most anticipated market event of the week - the FOMC meeting - and for Saxo’s Nick Beecroft, more tapering's on the cards: “We will see a continuation of the USD 10 billion a month of tapering, I don’t think the December payroll numbers were terrible enough to stop it", he says.
At the last meeting, the FOMC decided to maintain its main rate at a record low of between 0 percent and 0.25 percent until 'well past the time that the unemployment rate declines below 6.5 percent.'
Nick emphasises that what’s key now is for the Fed is to keep its credibility.
As a result, it's not the right time to play with the threshold of the unemployment rate. He says it’s a dangerous route to go down as investors would know if those thresholds could be removed any time and they'll ask "what's the point" of the exercise?
It will be Fed Chairman Ben Bernanke’s final monetary policy meeting of his eight-year tenure at the helm of the US central bank. Janet Yellen, is due to succeed him on 1 February.
01:20 minutes
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