Fed wrong to put off tapering, analyst claims

The Federal Reserve is only delaying the necessary and inevitable by putting off tapering, one financial commentator wrote. The Fed is only setting itself up to make the same mistakes again by predicting that it can begin tapering by the end of this year, one analyst wrote in the Financial Times.

Although the initial burst of bond-buying may have helped to stimulate demand in 2010 and 2011, the current strategy is now doing very little to stimulate economic growth and employment. 

It would be wise, therefore, for the Fed to shift away from its focus on short-term data, to recognise that it has achieved as much as monetary policy can do, and to start at its next meeting on a path to stabilise the size of its bond portfolio.

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