Was he inspired by Monday's gathering of his (two) living predecessors and their talk of legacy? Was he trying to keep Esther George from becoming the third person to go eight-for-eight in dissents? Or was the sly gray fox slow-playing us all along? Either way, history will note that it was Ben Bernanke who both began andbegan to end the great stimulus measure known as quantitative easing, and that the economy will have to try to survive being propped up with just $75 billion in bond purchases each month.
After months of intense discussion at the Fed and in financial markets, the Fed's policy-making committee announced Wednesday it would trim its purchases of long-term Treasury bonds to $40 billion per month, a reduction of $5 billion, and cut its purchases of mortgage-backed securities to $35 billion per month, a reduction of $5 billion.
"In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to modestly reduce the pace of its asset purchases," the Fed said in its formal policy statement.
And just before anyone freaks out, the FOMC hasn't forgotten all of its talk tying the no-longer-mythical taper to the unemployment and inflation rates. Their éminences grises have just come up with a better way to deal with it, or something.
The Fed said that "it likely will be appropriate to maintain the current target range for the federal funds rate well past the time" that the jobless rate dips below the 6.5% threshold, "especially if projected inflation continues to run below the Committee's 2 percent longer-run goal."
Short-term rates have been pinned near zero since late 2008. Most Fed officials expect to keep interest rates low well into the future. In their latest economic projections, also out Wednesday, 12 of 17 Fed officials said they expected the central bank's benchmark interest rate, which is called the fed funds rate, to be at or below 1% by the end of 2015. Ten of 17 officials expected the rate to be at or below 2% by the end of 2016.
Meanwhile, everyone seems to be taking the somewhat-surprising news in stride.
The Dow Jones Industrial Average recently rose 135 points, but the move to get there was quite volatile. Initially the blue-chip average fell by 67 points, but it quickly reversed those losses and was recently up by triple digits and is currently sitting around session highs.