Forex Flash: The Fed is tilted toward the hawkish side - Nomura

Nomura Economists note that the minutes for the January 29-30 FOMC meeting revealed that many FOMC participants were concerned about potential costs of quantitative easing and that there was difficulty in setting numerical thresholds for tapering/ending QE3.

They note that although most participants believed that QE3 had been effective in helping the economic recovery, the chances of ending/tapering asset purchases before the outlook for the labor market improves substantially has risen materially. They write, “Looking ahead, there is an increased possibility that the Fed could show a more detailed cost-benefit assessment of QE3 in the policy statement and introduce a framework to flexibly adjust the pace of asset purchases as early as the March meeting.”