Nearly everyone on Wall Street pretty much thought the Fed would do some sort of “tapering” of its current $85-billion-per-month bond buying scheme when it announced its decision on monetary policy today. Well, nearly everyone was wrong.
The Fed defied most expectations today and kept its foot on the monetary gas with no alteration to its current quantitative easing (QE) policy. Apparently, the central bank is still worried about a flailing economic recovery, including anemic job growth, mediocre gross domestic product (GDP) growth and the recent rise in interest rates.
The decision not to taper, at least at this month’s meeting, does not mean there won’t be any slowing going forward. The Fed still is likely to begin tapering at some point later this year. However, for equity bulls, bond bulls and commodity bulls, today’s unexpected move to keep the monetary pedal to the metal caused a lot of smiles on Wall Street.