The big policy and market issue today is Federal Reserve policy. There is widespread interest in today’s FOMC meeting because of the possibility that the Fed could taper the pace of its large scale asset purchase program. But why is there this interest? I believe it is because of the signal effect of tapering and nothing more. Explanation below.
At this time last week, I professed doubt about the Fed’s intentions on December tapering. The consensus seemed to be building around comments by St. Louis Fed President Bullard that a ‘tiny taper’ in the LSAP program was the right market signal. But comments by Philadelphia Fed President Plosser made it seem like we could also wait until a later date to taper in order to please the doves and then do so more aggressively to ple...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.