U.S ECONOMICS: Miller Tabak's Take On The Fed

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Andrew Wilkinson, Chief Economic Strategist at Miller Tabak & Co. LLC, says the FOMC's October statement is "remarkably and somewhat surprisingly" similar to the prior monthly note. The committee left the taper-window wide open for any forthcoming meeting. The statement noted that "fiscal policy is restraining growth," but took the issue no further. It also noted that the recovery in the housing market had slowed somewhat in recent months. Wilkinson suggests that this is "entirely on account of resurgent summer time yields, which played a role in the September statement yet has been dropped from the latest summary."

According to Miller Tabak, the message from the Fed is that the economy remains on course for recovery and that it sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall. It says: "The Fed is on hold, but the tone of the statement and the failure to bend on account of the government shutdown is very likely to bring forward the market's timetable of tapering from March where we feel the pendulum has swung too far. It would seem the Fed's approach is extremely balanced and that members are taking a level-headed view of the impact of interruptions to the economy. We believe that the central bank does not want to confuse the market by chopping and changing its view at a micro level. A bigger change might come for example should their be failure to agree on budget measures that would threaten further the ability of the government to remain open."



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