Goldman Sachs expects Federal Reserve to taper QE in September 2013

Riken Mehta

Brokerage house Goldman Sachs expects the Federal Reserve to taper its quantitative easing programme in its FOMC meeting scheduled in September. On the back of stronger June payrolls growth, upward revisions to prior months job data and a larger-than-expected increase in earnings, the broking firm revised the FOMC's tapering call from December 2013 to September 2013.

"We expect that purchases may be reduced from the current rate of USD 85 billion per month to USD 65 billion per month, with most or all of the adjustment occurring through reduced Treasury purchases. We are not changing our call for the date of the first fed funds rate increase, which remains in Q1 2016, at which point we forecast an unemployment rate of 6.0%," said Goldman Sachs Research note to clients.

It added that the unemployment rate remained unchanged, but the employment-to-population ratio and labor force participation rate increased.