Scaling back by the Fed will be keenly watched

The pace of growth in the US economy has generally slowed in recent quarters, though picking up slightly in Q2.

This slowdown is partly due to a tightening of fiscal policy, which it is estimated will depress GDP by some 1%-1.5% in 2013.

However, underlying private sector demand is quite strong in the US, helped by low interest rates, strong corporate balance sheets, a recovering labour market and pent-up demand for housing and durables. Deleveraging is also quite well advanced in the US. The expectation is that, after subdued growth in H1 2013, the pace of US activity will accelerate later this year and in 2014 as the fiscal tightening abates.