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Taper Timetable : Learn Vocabulary (THE HINDU)

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Taper Timetable - On quantitative easing in U.S : THE HINDU

The conclusion of quantitative easing in the U.S. could affect investment flows into India.

Quantitative easing has concluded in the world’s largest economy — at least for now. Almost nine years after the U.S. Federal Reserve started its unprecedented programme of liquidity infusion through the purchase of asset-backed and Treasury securities in the wake of the global financial crisis, Fed Chair Janet Yellen announced on Wednesday that starting next month the central bank would begin the normalisation of its balance sheet. To their credit, Ms. Yellen and her colleagues on the Federal Open Market Committee have walked the talk on their June decision to unwind the mammoth $4.5 trillion balance sheet. Most crucially, they have done it in a manner that precludes the risk of a ‘taper tantrum’ similar to that in 2013 — when Chairman Ben Bernanke had hinted at starting to turn off the tap — by setting out a slow, long-drawn and well-calibrated timetable to shrink the Fed’s holdings. The asset wind-down will begin with monthly reductions of a modest $10 billion in the three months through December. That amount will gradually increase in quarterly increments of $10 billion so as to reach, in October 2018, a monthly cap of $50 billion. It will continue at this level till such time the Committee concludes that the size of the central bank’s asset holdings is optimal for the effective conduct of monetary policy. Interestingly, Ms. Yellen, who asserted that the balance sheet was not intended to be an “active” policy tool in normal times, especially now that economic activity had strengthened, also placed a caveat. The Fed, she said, “would be prepared to resume reinvestments” if the economic outlook were to deteriorate so significantly as to warrant “sizeable” interest rate cuts.

Not that Ms. Yellen sees the healthy expansion undergirded by household spending weakening, the damage from the recent hurricanes that have battered coastal regions in the U.S. south notwithstanding. The FOMC has, in fact, marginally raised its median projection for U.S. real GDP growth in 2017 to 2.4%, from the 2.2% estimated in June, and signalled that it is on course to raise the federal funds rate one more time this year after leaving interest rates unchanged for now. However, the one element in the Fed’s policy calculus that eludes, in Ms. Yellen’s words, a more perfect “understanding” is the lower-than-anticipated trajectory of inflation. Given that monetary authorities in the U.S. are focussed on reflating the economy by supporting “further strengthening” in the labour market through an accommodative stance, the central bank has to remain vigilant in warding off any let-up in expansionary momentum. For Indian policymakers, there are both positive and not-so-welcome cues. While the ongoing moderate expansion in the U.S. bodes well for the country’s struggling exporters, the end of easy money conditions could augur a slowdown in investment inflows from abroad and resultant pressure on the current account deficit. The Reserve Bank of India, though, should welcome the clarity in messaging from its U.S. counterpart.

Important Words from Article & Meaning 

1)Preclude (verb)  ( बंद करना) - Pre-clude
Meaning - prevent from happening; make impossible.
Synonyms - prevent, remove, obviate.
Antonyms -  Allow , permit , encourage
Example -Age alone will not preclude him from standing as a candidate.

2) Undergird (verb) – ( मजबूत आधार प्रदान करना) - un-der-gurd
Meaning -  provide support or a firm basis for.
Synonyms - brace up , support
Antonyms - contradict , disapprove
Example - Ethical guidelines are needed to undergird national policies for information.

3)Trajectory (noun)   (प्रक्षेप पथ ) - tra-jec-tory
Meaning -  the path followed by a projectile flying or an object moving under the action of given forces.
Synonyms -  course, route, path.
Example -  As of now, my younger brother has not decided which trajectory to take after school – college or the military.

4) Cue (noun)  (संकेत) - kyoo
Meaning - a thing said or done that serves as a signal
Synonyms- hint, indication, sign/signal.
Example - The teacher relied on her clapping cue to get students to become attentive.

5) Elude (verb)(टलना) -   ih-lood
Meaning - escape from or avoid (a danger, enemy, or pursuer), typically in a skilful or cunning way.
Synonyms- evade, avoid/dodge, escape.
Antonyms - confront , face , encounter
Example - The criminal was able to elude the police in the crowded mall.

6) Outlook (noun) (दृष्टिकोण) - out-look
Meaning - a person's point of view or general attitude to life.
Synonyms -  prospects, expectation, future.
Antonyms - indifference  , unlikelihood
Example - The outlook for my daughter’s future seemed hopeful since she was accepted to Harvard University.

7) Bode  (verb)(अटकल) - bode
Meaning - to be a sign of something that will happen in the future, usually something very good or bad
Synonyms - augur, portend, predict (a good outcome/result).
Antonyms -  unforeseen , ceased
Example - The opening of the car plant will bode well for the town’s economic situation as it will give many people employment.

8)Ward off (phrasal verb) (संकट से बचना) - ward-off
Meaning - to prevent a danger or illness from affecting you or harming you.
Synonyms - prevent, avert, oppose/resist.
Antonyms - assist , support , allow
Example - He keeps trained and dangerous dogs to ward off unwanted visitors.

9)Let-up (noun)  (कमी, गिरावट) - let-up
Meaning - a pause or reduction in the intensity of something dangerous, difficult, or tiring.
Synonyms - abatement, decline, decrease.
Antonyms - increment , accumulation
Example - There had been no let-up in the corruption and unemployment in the new government too.

10)Taper (noun)  (ऊपर की ओर पतला होता जाना) -ta-par
Meaning - relating to a gradual reduction , diminish or reduce in thickness towards one end.
Synonyms - Narrow , become thinner , attenuate
Antonyms - Amplify , enlarge , expand
Example - The more I sketched my drawing, the more my pencil began to taper.

11)Quantitative easing (noun) – It is an unconventional form of monetary policy where a Central Bank creates new money electronically to buy financial assets, like government bonds. The new money swells the size of bank reserves in the economy by the quantity of assets purchased—hence “quantitative” easing.

Now answer the following Questions based on the Article:
  • On what monetary authorities in the U.S. are focussed according to the passage , ?
  • Why for Indian policymakers there are both positive and negative indications as mentioned in the passage ?
& Try to make sentences with these words (picked from article) in the comment section which will be reviewed by us. 
  • Wake
  • Crucially
  • Infusion
  • Normalisation 
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