Scoreboard: Taper vapours

Tapering may have lifted US stocks but the Federal Reserve will still pump $75 billion into the economy each month.

Who would have thought it? The Federal Reserve decided today that it would actually taper. It’s a miracle, a Christmas miracle! If you’re hearing a strange roaring in your ears, don’t fret, it’s not tinnitus; it’s the sound of billions of people around the world cheering. The end of the Great Tyranny! Well not quite, because when I say taper I’m being generous. The Fed only cut its bond buying to $75 billion from $85 billion each month. It’s still printing loads of money, just $10 billion less of it each month. Realistically, given the strong dataflow out of the US, it’s less than the bare minimum the Fed should have done. So this doesn’t make up for that at all and doesn’t restore its credibility, but it’s a start I guess. Small mercies etc. In terms of the split, the Fed has cut mortgage-backed securities purchases by about $5 billion and the same for Treasuries.

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