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Fed seen getting QE3 wind-down underway no later than March: Reuters poll

[December 07, 2013]  By Jonathan Ernst

NEW YORK (Reuters) — The Federal Reserve will start reducing its massive bond-buying program no later than March, according to a Reuters poll on Friday, with a handful of Wall Street firms expecting the U.S. central bank taking action as early as December following a second straight month of robust jobs gains.

The poll canvassing 18 of the 21 primary dealers - those banks who are permitted to deal securities directly with the Fed — found that eight of them expect the first so-called tapering of bond purchases to begin in March.

Another five call for the tapering to start in January, while four others pointed either to December or felt it could happen in either December or January. One bank estimates it will happen at some point in the first quarter of 2014.

Friday's poll results, which followed a stronger-than-expected reading of the U.S. job market in November, with the unemployment rate falling to a five-year low, slightly moved forward the anticipated time frame for the first tapering by the Fed. In the November poll, two of the 16 dealers surveyed did not see the wind down beginning until April 2014.

The Fed has been buying $85 billion a month of long-term Treasuries and mortgage-backed securities in a bid to hold down interest rates and accelerate what has been a sluggish economic recovery from the Great Recession.

(Reporting by Ellen Freilich, Ryan Vlastelica, Julia Edwards, Luciana Lopez; editing by Chizu Nomiyama)

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