The Fed will Reduce its Debt Purchases in November and Withdraw QE as soon as June Next Year

The market is holding interest to wait for when the Federal Reserve (Fed) will reduce its bond purchases (Taper). Global analysts at BofA said on Friday (20th) that the Fed will begin to reduce bond purchases in November, which is higher than the bank’s previous forecast. The estimated time point is 2 months ahead of schedule, and quantitative easing (QE) will be fully recovered in June next year at the earliest.

The minutes of the July meeting of the Federal Open Market Committee (FOMC) show that most of the 19 decision-making officials believe that this year is suitable to start reducing the scale of monthly debt purchases. As students across the United States are expected to return to school this fall, the market is expected to help more workers return to the labor market, and the Fed is also preparing to restore the market to normal operations.

The team led by Bank of America analyst Meghan Swiber said that the minutes of the July meeting proved that the Fed was slower in implementing debt reduction and more dependent on data, but it also prompted Bank of America to take action in November, earlier than the original estimate of 2022. January.

Swiber said that reducing the timing of debt purchases is the key, but the speed and content of the reduction are also important. Bank of America expects that if the Fed implements a reduction in debt purchases in November, the bond purchase plan will end around June next year at the earliest and September at the slowest.