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Breaking: Fed Chair Powell says it could be appropriate to start taper this year

In his prepared remarks for delivery at the Jackson Hole Economic Symposium titled “Macroeconomic Policy in an Uneven Economy,” FOMC Chairman Jerome Powell said that he thought at the July policy meeting that it would be appropriate to start asset tapering this year.

Market reaction

With the initial market reaction, the greenback came under renewed selling pressure and the US Dollar Index was last seen losing 0.2% on the day at 92.75.

Additional takeaways

“My view is that the ‘substantial further progress’ test has been met for inflation.”

“There has been clear progress toward maximum employment.”

“Since July, there has been more progress on employment but also the further spread of the Delta variant.”

“Will be carefully assessing incoming data and the evolving risks.”

“Timing and pace of taper will not be intended to carry a direct signal regarding the timing of interest rate liftoff.”

“We have much ground to cover to reach maximum employment.”

“Time will tell whether we have reached 2% inflation on a sustainable basis.”

“Despite today’s challenges, US economy is on path to labor market like before pandemic.”

“Baseline outlook is for continued progress toward maximum employment, inflation returning to 2%.”

“Labor conditions improving but turbulent.”

“Outlook for labor market has brightened considerably in recent months.”

“Favorable conditions for job seekers should help economy cover ‘considerable remaining ground’ to reach maximum employment.”

“Prospects are good for continued progress toward maximum employment.”

“Even after asset purchases end, our elevated holdings of longer-term securities will continue to support accommodative financial conditions.”

“Changes we made last year to statement on longer-run goals and monetary policy strategy are well suited to address today’s challenges.”

“Incoming data should provide more evidence supply–demand imbalances are improving, more evidence of continued moderation in inflation.”

“Also expect to see continued strong job creation.”

“If sustained higher inflation were to become a serious concern, fed would certainly respond, use tools to assure inflation runs consistent with our goal.”

“Responding to temporary fluctuations in inflation may do more harm than good.”

“With substantial slack remaining in labor market and pandemic continuing, such a mistake could be particularly harmful.”

“Inflation at these levels is a cause for concern.”

“Elevated inflation readings likely to prove temporary.”

“Rising durables prices a principal factor lifting inflation above 2% goal.”

“Seems unlikely durables inflation will continue to contribute importantly over time to overall inflation.”

“Would be concerned at signs inflationary pressures spreading more broadly.”

“Little evidence of wage increases that might threaten excessive inflation.”

“Long-term inflation expectations broadly consistent with 2% goal.”

“Little reason to think underlying disinflationary factors have suddenly reversed, likely to continue to weigh on inflation.”

“For now, policy is well-positioned.”

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