Article by ForexTime
The US dollar was given an added boost after comments by Boston Fed’s Rosengren who came out in favour of ending the Fed’s stimulus program (QE) this month unless something “dramatic” happens. Rosengren was speaking to the FT and is not only in favour of sticking to the tapering script, but also does not want to make a big communications revamp. While Rosengren is not a voter this year, his comments are an important indication of what the doves are thinking.
His dovish credentials were cemented last year when he dissented at the December meeting when the FOMC announced their intention to start the tapering process in 2014. The comments highlight how little support there is from the doves for Bullard’s view of extending QE until December.
Rosengren is less worried about volatility and inflation, 1) seeing the volatility as not enough to change his outlook, and 2) given there was no warning signal from markets as 10-year US bond yields, unlike in Europe, remain above the 2% inflation target. Overall the comments suggest the Fed will stick to its script on ending QE, even if there is still less clarity on liftoff.
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