U.S. ECONOMICS: CIBC Quick Take On FOMC News
CIBC says: "Notwithstanding the decision the leave the punch bowl in place for now, most FOMC participants interestingly continued to see tapering as likely this year, based on the economy's performance. Note that the meeting occurred before the growth pressure and uncertainties created by the government shutdown for a later move. While members continued to see downside risks to the economy and labour markets as having lessened, they expressed concerns that the tightening of financial conditions could slow improvement, signaling clear concerns about the potential drag from higher rates, one of the factors stressed by the Fed in its decision not to taper in September. The Committee also unsurprisingly indicated it would be prudent to await more information before reducing the pace of asset purchases, once again echoing the contents of the statement. At the same time, suggesting concerns on the credibility side from not validating market expectations, members expressed a concerns about their ability to sway investors in the future if they did not move. Given that and other considerations, the decision to maintain the current pace of purchases was a close call for several members, affirming comments in recent speeches by some FOMC members. Not a great deal of surprise. Markets are unlikely to assign the normal weight to the minutes given recent developments, including growing default worries. Limited reaction is likely."
-- Peter Buchanan, CIBC WM
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