Bernanke's taper -- that wasn't
Federal Reserve Chairman Ben Bernanke speaks during a news conference at the Federal Reserve, September 18, 2013 in Washington, D.C. Chairman Bernanke spoke after a closed door meeting of the Federal Open Market Committee. The Federal Reserve announced today that it will not scale back the bond-buying program and continue buying bonds at $85 billion a month.
The Federal Open Market Committee has been meeting the past couple of days to talk interest rates. They wrapped up this afternoon with, it must be said, something of a bombshell. There will be no taper today.
That is, no immediate reduction of the Fed's big bond-buying program to keep interest rates low.
The financial media world had expected the annoucement to go the other way, which might have created a bit too much hype about the promise of the taper.
"Guilty as charged," joked the Guardian's Heidi Moore.
"This is courage," she argues. "This is the Federal Reserve confronting the reality of the economy and saying it would be madness to start pulling out stimulus now -- when unemployment is not doing so well; when personal incomes are falling; and when the housing recovery looks soft."
Seemingly bad news, that the economy isn't as recovered as we all though -- except maybe for the stock market, which was way up today.
"We've used that metaphor before of the quantitiave easing stimulus being something like drugs, and the market being like a meth addict," adds Moore. "You can think of the market basically saying, 'Yay, we're going to keep getting more drugs!' because if there has been one thing that QE has done well, it's been to boost the stock market."