The Federal Reserve will not start tapering quantitative easing any time soon according to reports emerging after the close of the central bank’s latest open market meeting. The Board of the Federal Reserve has been meeting for two days. One of the most important issues on the table was whether or not to taper bond buying.
The Federal Reserve was hotly anticipated to start laying off of the bond buying program at this meeting. Markets have been shaken since earlier this Summer, when the bank first mentioned tapering the program. The economy has not demonstrated complete stability since the bank flew the tapering kite.
QE tapering delay
The statement from the Federal Reserve today means that there will be no tapering of the bond buying program in the coming weeks, but the central bank retains the ability to taper the bond buying program next month, and every month after that. Market uncertainty has been relieved, but only for the time being.
A new Federal Reserve Chairman will be picked in the coming weeks and months and that nominee will take Ben Bernanke’s place when the bank opens up in January. The front runner right now is Janet Yellen. She is expected to continue soft monetary policy if put in charge.
Federal Reserve rate hike
Questions about when the Federal Reserve will seek to kill off its current easy money policy are dominating discussions about the tapering of QE and a possible rate hike. Investors don’t want to know if the economy is recovering, they want to know how that recovery will effect Federal Reserve decision making.
The Federal Reserve will continue to buy $85 billion of bonds every month under the new plan. The program will continue “until the outlook for the labor market has improved substantially in a context of price stability,” according to the statement from the Board of the Federal Reserve.