Westpac believes that US growth forecasts by the Fed are overly optimistic, suggesting that bond purchases may continue past 2014. In a research note, Westpac believed growth would stagnate around 1.5% as opposed to forecasts indicating growth above 3% in 2014. Downgrades in the inflation rate to 1% also meant that the 2% Fed target was still well off. In the key housing market, refinancing and new mortgages have fallen from their peaks with the rise in mortgage rates. With the Fed stating these indicators as thresholds for tapering, Westpac's relatively bearish outlook suggests that the stimulus will continue. (VIEW LINK)
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