Fed Tapering and Its Impact on the Markets

Tapering is the period where the stimulus has worked and before an accelerated expansion toward inflation. Tapering is the first step in the process of either winding down or withdrawing from a monetary stimulus program that has already been executed and deemed successful. Communicating openly with investors regarding the direction of central bank policy and future activities helps to set market expectations and reduce market uncertainty. Federal Reserve has stepped in to boost the economy through billions in monthly bond purchases. Fed tapering introduces uncertainty to the market, a departure from the Fed’s steady asset purchases.