29 Apr 2021 | News & Feature

Fed Policy: Dovish, but whence the tapering?

  • The Fed maintained its policy outlook, despite its more upbeat assessment of the US economy. In particular, it sees the recent increase in inflation as transitory, suggesting that it will wait for a more sustained inflation before changing course.
  • The two stimulus plans from the Biden administration, worth a total of USD 4.1 T, could – if approved by Congress – pave the way for such inflation.
  • The US fiscal-monetary combo could dampen market volatility in the short-run, but also increase the risk of “tantrum”-like dynamics as 2022 approaches.