Today’s Federal Reserve decision is momentous for a number of reasons.
Foremost among them: the Fed’s monetary policy-making body, the FOMC, is expected to announce the first reduction in the monthly bond purchases under the open-ended quantitative easing (QE-III) program and later condemned it in totality which was introduced exactly a year ago.
In a broader sense, this first “tapering” of QE represents the beginning of a shift away from the easy-money policies that have dominated the monetary policy landscape over the last five years coming out of the financial crisis and recession.
There is, however, a debate over the amount to taper. Most of the experts are betting on $10 billion, bringing total monthly purchases down to $75 billion. Markets have already en-cashed the amount of sentiment it could have created.