Fed Watch: Bostic Says ‘Very Close’ to Taper Conditions

Investors and analysts await news from the Fed’s annual Jackson Hole policy summit while Atlanta Fed President says that tapering conditions are nearly met.

article-image

Source: Shutterstock

share

key takeaways

  • Federal Reserve Chairman Jerome Powell is set to speak this morning at 10AM EST
  • Atlanta Fed President says tapering conditions have nearly been met

Federal Reserve Bank of Atlanta President Raphael Bostic, speaking ahead of the Fed’s annual Jackson Hole policy forum, said he would approve of the central bank starting to cut back on asset purchases if United States employment numbers continue to look promising. 

Fed Chairman Jerome Powell is set to speak Friday morning following the conference, hosted by the Kansas City Fed virtually for the second consecutive year due to the rise in coronavirus cases around the country. 

“Powell says that the scope, or the direction of, tapering will be based on how COVID is going and the fact that they’re doing it virtually and they actually said ‘we’re doing it because of the increase in people sick’ is an indication that if the Fed is concerned about having everyone together,” said Steve Van Metre, founder of Steve Van Metre Financial. “They’re probably not going to taper.” 

Investors and analysts are watching to see if Powell gives any indication of when the Fed’s $120 billion/month asset purchases may start to slow. 

“A few weeks ago, I would have said with higher probability that I think Powell would announce a taper at the Jackson Hole event,” said Lyn Alden, founder of Lyn Alden Investment Strategy. “With the rise in the delta variant, and the Jackson Hole event going virtual because of it, they have some narrative cover to delay tapering a bit. Now I’d say it’s 50/50. “ 

The Fed’s July meeting minutes revealed that officials mostly agree that tapering conditions should likely be met by the end of this year. Central bankers however have different ideas of how best to go about the taper process. 

In terms of bond purchases, most participants “saw benefits in reducing the pace of net purchases of Treasury securities and agency mortgage-backed securities proportionally,” the minutes revealed. Other members expressed interest in reducing mortgage-backed security purchases more quickly than Treasuries.

“The challenge for the Fed now is that inflation is running hot, but economic growth is declining in rate of change terms,” said Alden. “If they taper, they’ll technically be tapering into a slowing economy; however, they are so loose now, that simply reducing their rate of asset purchases, although is tightening in relative terms, is still quite dovish in the grand scheme of things. It’s not the same as raising rates or performing quantitative tightening.” 

Want more investor-focused content on digital assets? Join us September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. Buy it now.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png

Research

Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.

/

article-image

Though the opposing flow trend is likely to slow over time, industry watchers note, bitcoin fund assets could one day eclipse the $90 billion gold ETF space

article-image

Celestia had the first mover advantage. EigenDA has staked ether. What sets Avail apart?

article-image

Bitcoin moved 1% higher Monday morning in New York, Matrixport analysts say $62,000 could happen next month

article-image

It’s hard to believe right now that crypto — even with all of its flexibility and massive capabilities — could ever be like cash on the internet

article-image

Michael Saylor announced Monday morning that MicroStrategy bought 3k more bitcoin after the X account was compromised over the weekend

article-image

Plus, Pudgy Penguins grows its brand and a group of Autoglyphs sell for $14.5 million