when central banks pursue an expansionary policy to stimulate an economy in a recession they promise to reverse their stimulatory policies once the economy has recovered continuing to stimulate an economy with easy money once a recession has eased can lead to inflation and monetary policy driven asset price bubbles 
tapering is the first step in the process of either winding down or withdrawing from a monetary stimulus program that has already been executed and deemed successful communicating openly with investors regarding the direction of central bank policy and future activities helps to set market expectations and reduce market uncertainty in the case of quantitative easing the central bank would announce its plans to slow asset purchases and either sell off or allow assets to mature thus reducing the amount of total central bank assets and the money supply central banks can hesitate to pull back on their qe policies due to taper tantrums where investors and financial markets overreact to a reduction in stimulus from the central bank for example announcements of impending central bank tapering have typically been met with sharp rises in government bond yields and drops in equity markets creating an incentive for monetary policymakers to delay plans to unwind their balance sheets to avoid harming the interests of their constituents in the financial sector federal reserve tapering and financial assetsas the covid 19 pandemic emerged in march 2020 the fed implemented an aggressive quantitative easing strategy injecting more than 700 billion in asset purchases and by june 2020 established a qe program to purchase 80 billion in treasury securities and 40 billion in mortgage backed securities per month the fed started tapering its purchases in december 2021 and by the spring of 2021 the economy showed significant strength and a cost of living surge in june 2022 the federal reserve changed its monetary policy direction to manage the threat of rising costs the fed revised its position after two years of an easy money policy ending its policy of low interest rates and significant intervention in the bond market the fed also put in place a plan to reduce its balance sheet of nearly 9 trillion in asset holdings it accumulated in recent years mostly treasury and mortgage backed securities the beginning of the fed s money tightening measures 1