The taper refers to the Fed slowing down its $85 billion asset purchase program that is intended to lower long-term interest rates.
Now,
In his latest piece, Hilsenrath writes that consensus is building around the idea that the Fed will lower its bond buying program by $10 billion to $85 billion a month.
"One option that has gained support among some Fed officials in recent weeks: Reduce their monthly bond purchases by a small amount, say $10 billion to $75 billion, and signal as loudly as possible the next step will depend on more evidence the job market is continuing to improve and inflation is moving back toward 2% from its current low levels."
Hilsenrath also reiterates that the commitment that is most important to the Fed, is their promise to keep short-term interest rates low until the jobless rate falls to 6.5%:
"Most troubling to top Fed officials is the risk that investors will see a cut in bond purchases as a sign they'll start raising short-term interest rates, which have been pinned near zero since late 2008. The Fed has said short-term rates will stay low at least until the jobless rate falls to 6.5% and possibly much longer.
"Fed officials see that commitment as a more powerful tool than the bond-buying program in their efforts to hold down long-term interest rates to encourage borrowing, spending, investing and growth and they want to reinforce it.
"The Fed's post-meeting policy statement and Mr. Bernanke, in his following press conference, are likely to emphasize that short-term interest rates will remain near zero until the jobless rate falls much further and that more reductions in bond purchases aren't set in stone."
The Fed's job just got a little more complicated.