Liz Looks at: The Fed’s September Statement

The Great Wait

There are eight Federal Reserve meetings with a press conference every year, but the quarterly meetings carry more weight. Yesterday one of the quarterlies happened.

Some of the highlights were:

• No formal announcement on when the tapering of asset purchases would begin, but it was signaled that an announcement may be coming as soon as November.

• An increased inflation (PCE) projection for 2021 from 3.4% to 4.2%, and for 2022 from 2.1% to 2.2%.

• A decreased GDP projection for 2021 from 7.0% to 5.9%, but an increase for 2022 from 3.3% to 3.8%.

• Two more Fed officials (now 9 out of 18) projected the first rate hike to happen before the end of 2022.

We’re still in a holding pattern on tapering, and Fed Chair Jerome Powell remained vague enough about the timing to allow for uncertainties through fall.

Flexing Their Flexibility

As we slowly exit crisis mode, the Fed continues to be incredibly cautious about making changes to its current monetary policy stance. Understandably so, since markets have been driven to new highs largely by the amount of liquidity and easy financial conditions put in place by the Fed. Pulling the food off the table too quickly could result in hungry mouths.

That said, some notable changes both in projections and tone occurred in this meeting. Namely, the increase in inflation projections and movement in the dot plot showing more members believing sooner rate hikes may be appropriate.

Perhaps more important were Powell’s remarks on the “tests” the Fed looks at to determine when tapering should begin. He discussed the indicators they watch—inflation and employment—and noted that substantial further progress has been made on inflation (check the box) and that many committee members feel that substantial further progress has also been made on employment, with Powell himself considering it “all but met.”

That’s more direct than he’s been in the past and suggests to me that an announcement of tapering is likely to come at the next meeting on November 3rd.

Ready? Or Not?

In my opinion, the economy and the markets are ready for the Fed to start tapering asset purchases. The messaging has been meticulously deliberate and careful, which allowed markets to set appropriate expectations and reduce the chance for a surprise. It’s important to note that a taper is not an ending of purchases, it’s simply a reduction in the amount of monthly purchases. Although there may be a wobble when the taper is announced, I do not expect it to cause meaningful or prolonged volatility in markets.

Rate hikes are a different story and markets will need some time to warm up to the idea. As careful as I expect the Fed to be with the messaging about rate hikes, this piece has more potential to move markets and we will undoubtedly discuss it in detail over the coming quarters. Until then, the liquidity punch bowl is still serving free refills.


Things are changing daily within the financial world. Sign up for the SoFi Daily Newsletter to get the latest news updates in your inbox every weekday.

Sign up

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at Liz Young is a Registered Representative of SoFi Securities and Investment Advisor Representative of SoFi Wealth. Her ADV 2B is available at

All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store SoFi Android App, Get it on Google Play

Liz Young ABOUT Liz Young Liz Young is SoFi's Head of Investment Strategy, responsible for building out the function and providing economic and market insights. Prior to joining SoFi, Liz was the Director of Market Strategy at BNY Mellon Investment Management where she formulated and delivered views on macroeconomic themes and their effects on capital markets. Earlier in her career, she was a due diligence analyst at Robert W. Baird and a research analyst at BMO Global Asset Management. Liz is passionate about educating others on markets and investing in order to help people feel empowered to take a more active role in their financial futures.

TLS 1.2 Encrypted
Equal Housing Lender