Jakobsen: No taper 'doesn’t come as a shock'Steen Jakobsen
While most analysts are close to flabbergasted by the Fed’s decision not to taper, Saxo Bank’s Chief Economist and CIO Steen Jakobsen, isn’t surprised.
In fact, while markets were gearing up for a USD 10 billion reduction of the Fed's monthly asset-buying programme, Steen kept warning us that QE was there to stay for quite some time.
He explains there are three main reasons behind his argument; Firstly, he says US job creation is not real, secondly, that the country has a very low inflation rate, which means it's on excess capacity, and finally, that we have seen an increase in mortgage rates and rates in general.
All this means the Federal Reserve was miscommunicating what was really happening and that's why market expectations were too high.
He adds that as a result, we could see the other major central banks taking steps to counteract the Fed's movements, which means we will see increased volatility in all asset classes.