Economy

Fickle Fed: Taper could arrive in 'coming months'

No Fed follow-through on QE
VIDEO1:0501:05
No Fed follow-through on QE

Federal Reserve officials moved no closer to unwinding their monthly asset purchasing program at the October meeting, pointing instead to "coming months" when a tapering could occur.

According to minutes from the meeting, Open Markets Committee members looked to economic improvement that "would prove consistent with the Committee's outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months."

Investors were watching the minutes primarily for clues as to when the Fed will begin to ease back on quantitative easing.

While the central bank had been holding to a 6.5 percent unemployment rate and 2.5 percent inflation before increasing rates, it had indicated earlier in the year that the $85 billion monthly bond-buying program could get wound down before the end of the year.

In fact, financial markets had been anticipating a September taper but the central bank did not comply.

Source: Federal Reserve | Flickr

That has left investors in a bit of lurch as to when the liquidity program would end.

The minutes provided even more uncertainty. Rather than stick with established benchmarks for tapering, members said other measures may be needed.

"Participants generally expressed reservations about the possibility of introducing a simple mechanical rule that would adjust the pace of asset purchases automatically based on a single variable such as the unemployment rate or payroll employment," the minutes read.

(Read more: Bernanke backs Yellen's 'easy' policy)

Markets reacted somewhat negatively to the 2 p.m. EST release of the minutes, with stocks narrowly negative and most bond yields edging higher for the session.

"I believe they know what they're doing," Bob Doll, chief equity strategist and senior portfolio manager at Nuveen Asset Management, told CNBC. "They're in control. They're just at a juncture that is moving from where they were to where they're going and struggling a little bit to get there."

The Fed deliberations, though, did nothing to calm a market that is getting increasingly jittery over the prospects of an asset bubble forming.

Fed minutes: QE communication issues
VIDEO3:3903:39
Fed minutes: QE communication issues

"Traders would like to hear a short-term increase to the monthly bond purchases, or at least a proactive economic growth story from the White House, to tell clients," said Todd Schoenberger, managing partner at LandColt Capital "Otherwise, the bears could very well come out of hibernation this winter regardless of the Fed's current stance to its monetary policy."

(Read more: Yellen: In no rush to raise rates, start taper)

Members proposed several alternatives to the current program, which is the third round of QE the central bank has enacted since the financial crisis.

One alternative was to eschew the open-ended nature of asset purchases and set a firm total. Another proposed a set timetable.

Broadly, the discussions centered on convincing the markets that tapering of asset purchases and increasing interest rates were separate events—essentially that tapering does not equal tightening.

—By CNBC's Jeff Cox. Follow him on Twitter @JeffCoxCNBCcom.