This is what I reckon he’s going to say:
- We are going to start winding back asset purchases some time over the next few meetings (He wont say September of December, though these are the most likely timings)
- Once we start winding back asset purchases to some lesser level, we might keep purchases at that new level for a while , or we might make further reductions in time, or we might go back to purchasing at a higher level, or, maybe some combination of all this. Its all data-dependent. (Up to now the market has seemingly wilfully ignored this simple message, but he’ll repeat it again).
- Just because we are winding back on asset purchases doesn’t mean interest rates are going higher any time soon. We’ve said rates stay down until 6.5% unemployment as long as inflation is contained. We are not close to either.
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If you are trading after these announcements/comments – remember its in many market player’s interest to get volatility. So volatility is probably what we’ll get. Attending to price movements & staying flexible is probably going to pay off.
