Why the Fed tapered asset purchases

Today’s commentary
Yesterday, the FOMC decided to reduce the pace of its large scale asset purchase program from $85 billion per month to $75 billion per month. The Fed has long wanted to taper its LSAP program and move to forward guidance to normalize policy but the data weren’t strong enough. Ben Bernanke pulled off this transition in masterful fashion, setting the stage for more market upside. Headwinds are building though. Building inventories, earnings disappointments and a lack of wage growth are my principal concerns.
The Taper Details
As I wrote in yesterday’s commentary, I had expected a December taper but my doubts on December tapering grew because hawks seemed to suggest tapering was wrong. Instead, the hawks believed the Fed should end QE aggressively or in one fell swoop. B...


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