Unwinding the Fed’s quantitative easing: will this time be different?

September 2021

In this newsletter, we address the likelihood and potential market risks of the Federal Open Market Committee (“FOMC”) of the Federal Reserve (“the Fed”), beginning to slowly remove monetary support through the scaling back of the respective security purchases as conducted through the quantitative easing program.

Using the 2013 “taper tantrum” as a reference, we briefly highlight the conditions that ultimately drove a repricing and tighter financial conditions during that period. We then focus on the forthcoming tapering of purchases and a few contextual factors that may make it different from the past tapering episode, hopefully in a manner that is less volatile and abrupt.