The Federal Reserve’s asset-buying program has been one of the key factors in supporting our nation’s stock markets and economy over the past five years, since it started back in November 2008. So it’s a big deal that the Fed decided at its June policy meeting that the so-called quantitative easing program would end in October. That plan was revealed in minutes of the meeting released yesterday.
The Fed began winding down the program in December, but hadn’t announced a specific end date until now. Given that it has played such a strong role in supporting the markets in recent years, you might expect Wall Street to react to the news – but the markets were fairly quiet yesterday, with the Dow and the S&P both dropping by a modest 0.7 percent.
That is very different from the reaction when former Fed chair Ben Bernanke first announced the tapering of the program last June. At that point, the S&P lost nearly 5 percent of its value in less than a week.
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