Tapering is a controlled and systematic form of monetary policy whereby the central bank either reduces or phases out the number of assets it purchases each month. Tapering doesn’t mean the Fed is raising interest rates (though that may come later), but it does signal a shift away from its ultra-loose monetary policy toward a more neutral stance. Essentially, tapering is a way for the Fed to step back from the extraordinary support it has been providing. Tapering is the Federal Reserve's gradual reduction in the pace of its large-scale asset purchases, like U.S. Treasury securities and mortgage-backed securities, after periods of quantitative easing to support the economy during crises. Tapering is the measured reduction of quantitative easing (QE) or other expansionary monetary interventions conducted by a central bank. Tapering reduces the pace of asset purchases without stopping them abruptly. It often signals confidence in economic recovery. Tapering occurs when a central bank gradually reduces its asset purchases, such as government bonds or mortgage-backed securities, following a period of quantitative easing (QE), indicating a shift toward less supportive monetary policy. Guide to Tapering and its meaning. We compare it with quantitative tightening, explain its causes, examples, and impact. Tapering is the gradual slowing of the pace of the Federal Reserve’s large-scale asset purchases. Tapering does not refer to an outright reduction of the Fed’s balance sheet, only to a. The term tapering refers to a monetary policy tool adopted by central banks and coined quite recently. The Federal Open Market Committee announced it is beginning to taper! But wait—what exactly is tapering? Tapering means gradually reducing the pace of the Fed’s securities purchases. Tapering is the reversal of quantitative easing policies, implemented by a central bank and intended to stimulate economic growth. Tapering refers specifically to the reduction of central bank.