To ‘taper’ or not to ‘taper’? Fading the Fed semantics debate

June 11, 2013

Is Federal Reserve Chairman Ben Bernanke avoiding the word “taper” in order to temper expectations that the U.S. central bank will ratchet down its massive bond buying program? This is one view that’s been widely bandied about in recent days.

But then why is it that the Fed officials who are most eager to “taper” have pretty much stopped using the word, too?

The last time Dallas Fed President Richard Fisher used the “T” word in a public speech was in February. But there’s no evidence at all that he’s backing off from his support of the idea. He’s been adamant the Fed should not yank the punch bowl away (or, in his words, go from Wild Turkey to cold turkey) but should gradually reduce stimulus.

Likewise, Philadelphia Fed President Charles Plosser last used the word in a public speech two months ago. Since then he’s leaned more heavily on “dial back” or “gradually unwind” but still means the same thing. Another supporter of tapering QE3, Richmond Fed President Jeffrey Lacker, has similarly changed up his verbiage,  but not his views.

In fact, the only top Fed official who regularly uses “tapering” these days is one who pretty much thinks it’s too soon to touch that $85-billion-a-month dial. “I’d like to see some reassurance that this (low inflation) is going to turn around before we start to taper our asset purchase program,” St. Louis Fed President James Bullard said earlier this week.

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