Wednesday, December 18, 2013

Oops, I was wrong - Fed begins taper

Sigh. I was so sure of myself – and the Fed, that they would not decide to begin the tapering of quantitative easing at their FOMC meeting today, but they went ahead and tapered by $10 billion per month starting in January, cutting their monthly purchases of treasury and agency debt from $85 billion to $75 billion.
 
In truth, that $10 billion per month is relatively modest and not very likely to impact the economy terribly much.
 
The good news is that they have gotten that initial tapering decision out of the way, so that eliminates a whole level of second-guessing of the Fed by private sector businesses. The Fed is essentially planting a stake in the sand, asserting that they fully expect unemployment to improve significantly in 2014. Now, we'll see if businesses take the bait and up their game on the investment and hiring fronts.

-- Jack Krupansky

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