Weekly Market Update (25 October 2021) – Powell: It’s time to taper QE

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ByLCMS Traders FX Analysis Team

 OCT 25, 2021

(1) Last Monday, New Zealand Prime Minister Jacinda Ardern announced the extension of the ongoing COVID lockdown in the city of Auckland by two weeks. The extension will buy more time for the country to speed up its vaccination programmes. Furthermore, a vaccination target will also be introduced to provide a guide on when the restrictions could be eased.

(2) In the released monetary policy meeting minutes by the Reserve Bank of Australia last week, the central bank mentioned that its committee members have started a discussion on the impact of the recent Evergrande developments on the international financial markets. The members highlighted that if the handling of Evergrande’s problems is not done orderly, this may lead to a negative impact on other developers and financiers. Nonetheless, the RBA said that the sharp price movements up until now have been limited to Evergrande’s own bond and equity prices, as well as some other local property developers and banks. Thus, the risk is still contained within China at the moment

(3) During his panel discussion last Friday, Federal Reserve Chairman Powell highlighted that the central bank is on track to finish tapering by mid-2022. Also, he expressed a sign of concern over the persistently high inflation that is expected to last longer. Nonetheless, Powell did mention that he thinks it is time for the central bank to taper quantitative easing.