Koo: Tapering Needs To Start Nine Months Ahead Of Expected Tightening

Strengthening economic data has some people arguing that the Fed could begin tapering after the December 17-18 Federal Open Market Committee meeting, but according to Nomura Research Institute chief economist Richard Koo one thing not many people are considering is that tapering needs to start well ahead of policy tightening. Third-quarter GDP growth has been revised upward from 2.8% to 3.6% (quarter on quarter, annualized), and unemployment is down to 7.0%. “All in all, I think the conditions required for the Fed to start ‘tapering’ QE are falling into place,” writes Koo, adding that “it is important to understand that…