The Fed Tapers Again

The Fed did what most of us expected it would, and that was to continue to taper its bond-buying program. The Federal Open Market Committee (FOMC) decided to pare down its current $75-billion-per-month bond buying program to $65 billion per month, with the taper split evenly between Treasuries and mortgage-backed securities.

While the Fed’s decision in this final Ben Bernanke-chaired meeting was very well telegraphed, the market didn’t seem to take much comfort in the announcement. Stocks were down about 1% going into the meeting, and a half hour later they remained down about 1%.

Interestingly, the vote to continue the Fed’s taper was unanimous, with all the FOMC members agreeing on the decision to peel another $10 billion per month from its bond purchases.

The next FOMC won’t come until March, so the Fed will be a relative non-factor for at least another two months or so. Until then, we can ease back on the Fed watching and concentrate on what’s really moving markets right now, namely concerns about global economic growth and corporate earnings.