The Federal Reserve is facing a big summer ahead as markets look for clues about when the ultra-easy policy measures put in place during the pandemic might finally start to unwind.
Source: CNBC
Investors got their first indication this week when minutes from the central bank’s last policy meeting featured a discussion in which some members said it would be time soon to talk about rolling back at least one of the key tools the Fed has used to guide the economy.
To the market’s ears, the passage sparked talk of “tapering,” a word that generally makes investors nervous as it means the Fed will start reducing the $120 billion or so of bond buys it makes each month. That program, also referred to as quantitative easing, has been a lynchpin for markets, which have consistently risen and fallen with the size of the central bank balance sheet for more than a decade.
Fed officials have pledged plenty of warning before an actual tapering happens, so the presence of such talk at the April meeting likely sent the first signal that a reduction in purchase is on the table, with more information to come in the months ahead.
