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In one of the most highly anticipated releases of the year, the Federal Open Market Committee (FOMC) meeting minutes from July 30-31 were released today (Wednesday).
They will be picked apart for days – but here's what you need to know.
First, investors were left with no real clarity on when and by how much the Fed will start winding down its monetary stimulus measures – although a taper starting in 2013 looks likely.
While some Federal Reserve officials were "broadly comfortable" with Chairman Ben Bernanke's aim to start tapping the brakes on its asset purchase program sometime this year, a few members chimed in that tapering might be in order sooner rather than later.
"Almost all committee members agreed that a change in the purchase program was not yet appropriate" and that patience is called for, the minutes showed. Yet, a handful added "it might soon be time to slow somewhat the pace of purchases as outlined in the plan."
Worried about the consequences of prolonging quantitative easing, the Fed said at the end of the FOMC meeting in July that while economic growth should pick up from its recent snail's pace, persistently low inflation could dampen the recovery.
The central bank also reiterated its pledge to hold the target interest rate near zero as long as the jobless rate remains above 6.5% and the outlook for inflation over one to two years doesn't exceed 2.5%.
But the real story is what happened to the stock market today…
FOMC Meeting: The Stock Market Today a Preview of What's to Come
Immediately following the release, investors hit the panic button and sent the Dow down some 122 points before relenting and allowing stocks to stage a sharp turnaround.
Then, about an hour before close, the Dow again plunged to close down 105 points, or 0.7%.
Kent Engelke, chief economic strategist at Capital Securities Management, told The Wall Street Journal that while markets have mostly discounted the foreseeable, which is a tapering as early as September, jitters prevail.
EDITOR'S NOTE: Bernanke's printing presses are still running… for now. But do you have a plan in place for when they stop? Here's what to do to protect your wealth right away.
"People are still being whipped around by fears of Fed tapering," Engelke said. "We just have to accept that we're going to have a change [in policy], but any change is unsettling."
Ever since the first mumblings of tapering in May, equity markets have been on edge.