The Federal Reserve’s statement indicates that it will reduce the size of its asset purchases from the end of 2021; those from the European Central Bank suggest that it will reduce it in 2022. If by the end of 2021 and 2022, there is slow growth and significant disinflation then it will be difficult for the Fed and ECB to allow tapering.
🔋COVID-19 wave in the US from the summer of 2021
"The first hurdle to tapering the U.S. in particular: the increase in the number of COVID-19 cases is due to the Delta variant wave, which weakens the economy: declining production prospects, household confidence, job creation."
🔋Risk of slow growth in late 2021 and 2022
"Growth at the end of 2021 and into 2022 could be slowed by the possibility of a reduction in the fiscal deficit between 2021 and 2022, a real wage decline in 2021, and a slowdown in commodity supply, which is holding back growth in some sectors."
🔋Disflation, which may be significant between 2021 and 2022
“The central bank predicts significant disinflation between 2021 and 2022, but it could be even clearer, given the absence of rising unit labor costs and changes in the underlying impact of commodity prices, which after rising between 2020 and 2021, will fall (albeit only slightly) between 2021 and 2022. "
"As has been announced, especially in the United States, the solution may be a partial and conditional reduction of securities purchases."
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