Fed tapering next week likely, why is the consensus so gun-shy?

It seems that many market economists, analysts and journalist are resistant to the idea of the FOMC beginning the taper of asset purchases sooner rather than later.  The consensus still seems to be leaning towards March or January at the earliest rather than next week.

I think December tapering is the most likely outcome, with little-to-no chance that they will wait till March. To be sure, its strange that a consensus that expected tapering in September is so gun-shy to call it for earlier than March.  This is especially the case given the data and the outlook for the US has only gotten so much better since then and that bond markets have been so much better-behaved in the last few months.  Perhaps they were too badly burnt by a bad call.

The key sticking point seems to be that inflation is currently below target.  Oddly enough, this wasn't a problem when calling for a September move.  Furthermore, the Fed has had relatively low inflation forecasts for sometime and there doesn't appear to be any risk that they will have to lower them at the release of their next set of projections next week.

I think analysts are either missing or are not communicating the point that the current settings of monetary policy were designed to mitigate a set of downside risks that have now passed, with the outlook for growth now much better.

As stated by FOMC vice chair Dudley back in May,"the base case forecast is not the sole consideration—how confident we are about that outcome is also important." The base case and confidence in 2014 has improved markedly given risks around fiscal contraction in particular have faded and trading partner growth has improved.

An often used analogy for monetary policy is driving a car through the rear-vision mirror. Using unconventional monetary policy like QE could be thought of as using an experimental fuel, which should help you go faster than otherwise, but maybe bad for the engine if over used.

For me, it doesn't make much sense to have policy settings remaining at full throttle if you can see that you are starting to turn a corner.  This is especially the case as the longer try and maintain full throttle, the bigger the risk that you cause engine failure.

Markets seem better prepared for tapering than analysts, although its still likely to be a negative event for markets in the first instance.  Its unlikely to be as dramatic as mid-year, but certainly it should weigh on metals, bond prices and emerging market currencies, which continue to track 10-year Treasuries.