Many pixels will be spilled about the meaning of Ben Bernanke's decisions in his last FOMC meeting as chair, but really they're just the culmination of a project he has been working on since the summer. Bernanke indicated during today's presser that today's changes - the most important being the start of tapering and the language strengthening the forward guidance - were meant to neutralise each other in terms of their impact on the overall accomodativeness of monetary policy. That's a mouthful of a sentence, so here's an easier way to think about it... Tightening signals: 1) The taper started, 2) Bernanke made several admissions of the central bank's impotence regarding its ability to bring inflation back to target, 3) The forecasts for inflation in the Summary of Economic Projections remained very low, and 4) Eric Rosengren dissented from the dovish side, while Esther George voted in favour. Loosening signals: 1) The forward guidance language was strengthened, 2) Despite beginning to slow their pace, LSAPs are expected to last through the end of next year, whereas previously Bernanke had said they might end in mid-2014, and 3) He used "tapering isn't tightening" language along with an emphasis that policy could change again if the economy doesn't improve according to forecasts. Overall, Bernanke said, accommodation was "about the same" as before the meeting. In his recent speech on communications policy, Bernanke suggested that despite QE's effectiveness to this point, the marginal costs and marginal benefits of its continued use now represented an uncertain tradeoff. And in a point that he repeated during today's presser, Bernanke noted that QE's influence on the term premium can have unexpectedly destabilising effects. His belief is that guiding the market's expectations of short-term rates was a safer way to influence long-term rates than through the term premium. Gavyn Davies has referred to this effort as the separation principle; allowing the term premium to rise was part of the strategy. Ever since the market freaked out in response to his early-summer hints at a future tapering, Bernanke has tried to distinguish the uses of these two paths in the minds of market participants. Today's market reaction was positive, a (very early) sign that in this narrow sense, he might well have succeeded. Bernanke has shrunk the signaling channel through which QE works, while simultaneously he has widened that of the Fed's guidance on short rates.