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Fed taper will remain slow and steady: CNBC survey

The Federal Reserve will continue to taper its stimulus of the U.S. economy by announcing a $10 billion reduction in its monthly asset purchases at each of its policymaking meetings scheduled this year, including the two-day session that starts Tuesday.

That's the consensus forecast from 45 of the nation's top money managers, investment strategists and professional economists who responded to this month's CNBC Fed Survey.

An overwhelming 87 percent expect the Fed to taper by an average of $9.87 billion at this month's meeting, roughly matching the $10 billion reduction, from $85 billion to $75 billion a month, announced after the the central bank's December meeting.

Seventy-two percent of the survey's respondents expect the Fed to announce an average $10.65 billion reduction after each of the rest of its meetings this year.

That scenario would cut the year's quantitative easing to $460 billion from a bit more than $1 trillion last year and roughly lines up with the survey's prediction that the Fed will buy $466.6 billion in assets this year.

Half of the respondents think that's the right pace, with 29 percent preferring a faster taper and just 19 percent favoring a slower one.

While almost all those taking the survey expect incoming Fed Chair Janet Yellen to be equally or more dovish on checking inflation, 71 percent see the incoming Federal Open Market Committee as just as or more hawkish than last year's members.

The S&P 500 got off to a bad start in the new year. After losing almost 4 percent this month, it's about even with its mid-December level. But even though the index has made a round trip, the new survey shows more optimism about stocks than when we asked six weeks ago for a 2014 year-end forecast.


In the mid-December survey, the average forecast had the S&P ending 2014 at 1,844. The new year-end forecast is 1,913—7.4 percent above its current level.

Most respondents said the Fed tapering will have no effect on stocks, but most of those who think there will be an impact expect it to be negative.

By CNBC.com's Alex Crippen

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