Flash: Projecting the global repercussions of Fed tapering – BMO Capital Markets

FXstreet.com (New York) - In light of Fed’s Bullard’s comments yesterday, we feel it’s important to reiterate that there is at the very least a two-dimensional theme to Fed QE tapering, suggests Greg Anderson at BMO Capital Markets.

Key quotes

“The first dimension, as Bullard makes note of, is the one pertaining to the outlook for output and inflation. The second one pertains to the unwanted spillover effects of QE, which the Fed probably has a duty to avoid independent of the concerns from Fed officials such as Bullard”

“One trick for the remainder of the year is for the Fed to strike an appropriate balance between those two dimensions. What is good for the US is still to a large degree good for the rest of the world, except QE. More does not necessarily equate to better.”