In the last three consecutive years, Fed had planned to give a drop to their accommodation at the initial phase of the year, but in reality it mostly got boosted soon after there is growth in the economic situation keeping the forecast lagging behind. Conscious and determined not to repeat this mistake again, the policy makers of Fed are gearing up for the summertime drop in an organized and systematic manner. In the words of Drew Matus who is the former economist at the Federal Reserve Bank, “Fed will be trying to push the monthly bond purchase to almost $85 billion in this summer, without making any repetitive error this time.”
Matus also adds that Fed has been previously fooled multiple times by the slumps of summer of the US economy, which is why it is expected to make them more conscious this time. He feels that Fed will be a little more prepared for its exit strategy. Matus is also the chief deputy of US economist working at the UBS Securities LLC at the location of Stamford, Connecticut. The report of last week’s Labor Department reveals that the economic scenario has generated average 88,000 jobs in the month of March, considered as the lowest in the time span of nine months. This report is confirmed for the concerns of William C. Dudley, the New York Fed president that the market of job at US is as weak as it appears. On the other hand, the report of April comprised of payroll of six months with a growing average of 197,000.
Dudley who is the vice chairman of the Federal Open Market Committee stated in a speech on March 25th organized at New York that the current development in the employment growth and its payroll will be getting high attention as it is comparatively out sized when considered with the growth rate of economic market activity which supports it. He adds that they are familiar with this situation and has seen this before also in the year of 2011 and 2012 when the growth of employment got slowed down suddenly.
The job report for the month of March is expected to bolster the debate in relation to FOMC voting candidates, including Dudley, Charles Evans (president of Chicago Fed) and Eric Rosengren (President of Boston Fed) that the central bank of the nation should try to enhance the stimulus record better within the time period of end of the year.
In a report published at Chicago Fed, Evans stated that there will be more confidence if the market showed indications for growth that reflects trend of sustainability and enhancement. He adds that the continuation of the accommodative policy is the right response to purchase asset in this labor situation of market.