"Liquidity conditions will be supportive if the US economy gets so much better that the unemployment rate goes to 6.5 percent and markets would go up on the back of that story," Matthews adds.
Below is an edited transcript of Mark Matthews's interview on CNBC-TV18
Q: What did you take away from the minutes of Fed meeting? Should one get worried about liquidity tightening in 2013 or it's premature to draw such a conclusion?
A: I think it is premature. A few of the Federal Open Market Committee (FOMC) members said they want to end the purchases in 2013. But a few could mean three, which is not a lot. If it was a majority, they would have said as a majority and so I do not mind if a few of the FOMC members want to stop the purchases in 2013. But that will be very data dependent, specifically on the labour data and the labour data in the US is improving at a very slow rate and is still very weak.
If one go back to the FOMC minutes of December '12, where they spelled out the new evince rule whereby they would continue a very low interest rates and QE until the unemployment rate gets to 6.5 percent or below, then we will still get QE3 until the unemployment gets at 6.5 percent.
Q: Is there any reason to believe that liquidity conditions will not be supportive to asset prices in 2013?
A: The only way it would happen is if the US economy gets so much better that the unemployment rate goes to 6.5 percent and markets would go up on the back of that story.
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