Markets & Economy

The Fed’s tippy-toe taper plans could not be more clear

Prospects for faster growth are apparent only in Fed models

Like most fine executives who are about to retire, Ben Bernanke would like to remind us all that he is still chairman. On Tuesday he did just that, laying out where the Fed's been, where it is now, and setting some wide boundaries for what lies ahead. It was one of his best speeches -- worth any thousand pieces of media or Wall Street "analysis." The Fed will reduce slightly its purchases of Treasurys and mortgage-backed securities upon any fig leaf of improving data, and then see how markets take tiptoe tapering. The Fed's first try was jawbone-only in May and June, and did not go well. Bernanke said the resulting jump in long-term rates "was neither welcome nor warranted" in the judgment of the Federal Open Market Committee. In other words, a large majority at the Fed did not intend to induce the rate rise, and feels that markets overreacted. Going forward, the Fed's plans could not be more clear. The Fed signals big stuff ahead by a concert of communication. In the la...