Risks to the Fed's tightening plans

How plausible is the Fed’s plan for tapering and rate rises? Our view is that the near-term risk (30%) is for a later and/or slower pace of tightening. But the longer-term risk is the other way – a faster pace of rate rises due to higher inflation than expected.

The Fed yesterday sounded slightly more hawkish than previously but markets took the news calmly. This was perhaps because the Fed has been gradually converging towards the market’s upbeat view of the