The Fed is clearly looking to offset the market impact from any decision to wind down its asset purchases by strengthening its commitment to leave its policy rate at near-zero for several more years. To some extent, this is because officials are less convinced of the net benefits of quantitative easing and consequently want to alter the mix of policy by stressing its forward guidance without changing the overall stance. The other motivation is that officials are keen not to repeat events earlier this year when markets mistook the Fed’s initial tapering talk as a signal that rates could rise sooner.
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