Fed Update: Don’t Fear the Taper

History may not repeat, but it often rhymes. With the Federal Open Market Committee (FOMC) now close to reducing its asset purchases, we should refresh our collective memory of the last taper. That traumatic episode appears to have weighed on the Fed’s current approach.

It all started innocently:

“If we see continued improvement and we have confidence that that is going to be sustained, then we could in the next few meetings, take a step down in our pace of purchases.” – Ben Bernanke, May 22, 2013.