The Federal Reserve is most likely sticking to its plans and taking away Wall Street's favorite punch bowl: the tremendous bond-buying program that began two years ago in an unprecedented effort to stimulate the economy.
A little over a year ago, any notion of winding down the purchases—not to mention stopping them entirely—was too soon for Wall Street. The market threw several "taper tantrums" last spring and summer after then–Fed Chairman Ben Bernanke hinted that the central bank would consider dialing back its stimulus if the economy continued to improve. Now, though, there's much less separation anxiety. The Fed started trimming its asset purchases in January and has slowly been weaning Wall Street off of them ever since.
In an interview with the Wall Street Journal this weekend, Boston Fed President Eric Rosengren said that the Fed will probably adhere to its October timeline for wrapping up the program. "The bond purchase program was started under the context that we needed to make substantial improvement in labor markets," Rosengren said. "Unless my forecast of labor markets changes dramatically between now and the end of the month, I would think that the criteria for substantial improvement of labor markets would have been met."
The September jobs report contained some encouraging news on that front: The economy added 248,000 jobs and unemployment fell below 6 percent for the first time since July 2008. That's not to say the economy is golden—Americans keep leaving the workforce and long-term unemployment remains severe. But as Rosengren pointed out, jobs growth "has been pretty strong over the course of this year," and that seems to be good enough for the Fed.