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Is the Fed taper starting to look more distant?

Andrew Harrer | Bloomberg | Getty Images

Since the U.S. Federal Reserve shocked markets last week with its decision not to scale back its monetary stimulus, the argument is building that taper may not happen at all, or at least not for a long time.

Investors have been fretting over the beginning of taper ever since Fed chairman Ben Bernanke first uttered the "T-word" in late May. The reduction in the constant flow of easy money out of the U.S. central bank panicked investors, prompting a broad selloff that saw emerging markets in particular take a beating.

Edward Dempsey, chief investment officer of Pension Partners, said despite intense speculation over when the tapering will happen, in his view it could get pushed out for some time.

(Read more: 'No taper' shouldn't have surprised: NY Fed boss)

"There's a school of thought that thinks maybe never," said Dempsey, referring to the potential onset of tapering.

When will the Fed taper?

"The Fed stared into the deflationary abyss and backed away. They are lowering their growth forecasts, they are telling us that economic growth going forward is weaker than they previously thought," he added.

The U.S. central bank has always said it would only reduce the pace of its bond buying program if the economy was strong enough to withstand it. The bank set thresholds, namely that unemployment would need to fall to 6.5 percent, from current levels of 7.3 percent, and said it would only taper if inflation rose to 2.5 percent, from current lows of 1.5 percent.

(Read more: No Fed taper this year, says former Bush advisor)

However, economic data out of the world's largest economy has disappointed in recent months, and last week the Fed reduced its growth projections for this year and next. The bank also warned that fiscal tightening in Washington in the form of sequestration spending cuts remained an obstacle to growth in its most recent Federal Open Market Committee meeting.

Dempsey said it was clear the U.S. economy had not recovered enough to warrant a taper anytime soon.

"We have evidence of [slower growth] in the U.S., looking at casual dining chains that keep reporting lower and lower top line sales. That's where an average American would be eating out," he added.

(Read More: Some traders got'no taper' decision news early)

But Dempsey believes the main factor holding back the onset of tapering is Bernanke's reluctance to carry out a major policy change just before his term expires on January 31.

"Bernanke's term is up in January [and] for him to taper [it] would be a major shift or policy change that he would lock his successor into; it's not logical. Because why would he want to lock his successor into a policy change that they may not agree with?" added Dempsey.

Following the withdrawal of Lawrence Summers' - the more hawkish candidate - bid to be the next Fed chairperson earlier this month, vice-chair Janet Yellen now looks to be a shoo-in for the role. Dempsey told CNBC that an extremely dovish new Fed chairperson would push out the chance of tapering even further.

(Read More: Defeat of Larry Summers could lead to a government shutdown)

"Yellen is the presumed next chairman. She is very dovish and is on record as saying that she would vote for interest rates below zero if there was such a thing to vote for...I suspect that [if Yellen gets the role] we might not see tapering for quite a long time," he added.

— By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie