Stocks Welcome a 'True' Taper with a Smile

Fed Tapers $10B; Cuts Monthly Mortgage Bond Buying to $35B, Treasuries to $40B

The Fed announced Wednesday it will start tapering QE by $10 billion monthly. The Fed said it will cut $5 billion from mortgage bond purchases, reducing the amount to $35 billion, and will cut $5 billion from treasuries, reducing the amount to $40 billion.

Below is the full release:

Information received since the Federal Open Market Committee met in October indicates that economic activity is expanding at a moderate pace. Labor market conditions have shown further improvement; the unemployment rate has declined but remains elevated. Household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months. Fiscal policy is restraining economic growth, although the extent of restraint may be diminishing. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for the economy and the labor market as having become more nearly balanced. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation... More