The Best-Laid Plans Revisited

The Fed has signaled its intention to announce a tapering of asset purchases at the conclusion of the November 3 rd FOMC meeting and to begin that process as soon as the middle of the month . In response, the futures market has brought forward the timing of Fed tightening. However, investors may be too bearish on the prospect of higher official interest rates. R ecent history is replete with examples of policymakers taking much longer than anticipated in execut ing the withdrawal of monetary accommodation . The probability the Fed will veer off financial markets’ current rate path trajectory is high.