Fed’s Lacker on why its time to taper

Bloomberg chief Washington correspondent Peter Cook recaps his interview with Federal Reserve Bank of Richmond President Jeff Lacker on tapering of the Bank’s bond-buying program and the recent flood of comments from bank presidents.Here is a direct video link.

I think the Fed is baffled as to why saying they may start to slow or tapper their bond buying (as opposed to halting buying or liquidating some holdings) is seen by financial markets as tightening. The reality is however, that in a world where markets have been conditioned for 3 years now to bank on more and more and more QE, failure of central banks to increase the flow is felt as a form of tightening. This is the no win scenario they have made for themselves and for over-valued asset markets from here.