Forex

Tapering

Definition

The gradual reduction of asset purchases under a central bank's quantitative easing program, signaling the beginning of monetary tightening. Tapering announcements typically cause currency and bond volatility.

Example
The Fed's 2021 taper announcement triggered the 'taper tantrum' — rising yields and equity volatility as markets priced in the end of accommodation.
Related Terms
FOMC (Federal Open Market Committee) Hawkish Quantitative Easing (QE) Yield Curve
Frequently Asked Question
What is Tapering in monetary policy?
Tapering is the gradual reduction of QE asset purchases. It signals the start of policy normalization. 'Taper tantrum' = market volatility triggered by tapering announcements. Tends to strengthen the currency.
APA Citation
Clark, R. (2025). Tapering. VixShield Trading Glossary. Retrieved from https://www.vixshield.com/glossary/tapering
RC
Russell Clark, FNP-C
Author of SPX Mastery series · Founder of VixShield
Last updated:  ·  Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.