Live Updates on Bernanke and the Fed The Federal Reserve's policy making committee has concluded its last meeting of the year. In addition to its decision to taper its bond-buying program modestly, the Fed released its latest economic forecast, and Ben S. Bernanke, nearing the end of his term as Fed chairman, is holding a news conference. We are following the events in a live blog here. Auto-Refresh: ONTurn ONRefresh NowFeedTwitter3:00 P.M. Potential Tools for the Future Mr. Bernanke says the toolbox is the toolbox. If the economy swooned again, the Fed could buy more government debt, lower the interest rate on reserves and the like. Anything else is a "fanciful" discussion, he said. He adds that the committee has looked at lending to banks that demonstrate they're using the funds to lend to households and businesses, as they did in the "funding for lending" program run by the Bank of England. But he says that current conditions don't merit it: Banks are already swimming in liquidity, he notes. Annie Lowrey 2:57 P.M. Increasing the Economic Impact 2:54 P.M. Inside the Committee Room Was it a close call? Mr. Bernanke says: "We debated it quite extensively ... we only assume, or project, a small pickup in growth next year ... we're just beginning this process now." Nelson D. Schwartz 2:49 P.M. The Outlook on Inflation The Fed's extraordinarily aggressive policies have failed to bring unemployment down quickly and have also failed to generate an economy hot enough to push inflation up toward the Fed's target. The clear signal from the market is that the Fed could be doing more, some economists think, and that argument seems to be generating more and more concern in the central bank. Mr. Bernanke notes that inflation could pick back up. For one thing, health care costs have proved unusually low for the past few years. Those could return toward their trend and result in higher inflation over all. Rising growth could also result in higher inflation, he said. "We take this very seriously," he said. Inflation can't be picked up and moved where you want it. It requires some luck and some good policy. 2:47 P.M. Bernanke on Yellen's Support Mr. Bernanke on Janet Yellen, the Fed's No. 2 official and his potential successor: "She fully supports what we did today." 2:45 P.M. Still Slack in the Labor Market Mr. Bernanke has underscored that the labor market will still be in poor shape when the unemployment rate falls to 6.5 percent. Even at that level, there will be a "substantial amount of slack" in the market, he said, because of underemployment, discouraged workers and other trends. That means that the Fed's zero interest-rate policy will be appropriate "well past the time" that unemployment reaches that mark, he stressed, especially if inflation remains subdued. The taper's going to be "data dependent," he said, and then said again. 2:43 P.M. Signs of a Steady Taper "My expectation is for similar moderate steps going forward through 2014," according to Mr. Bernanke. Sounds like a steady taper, if the economy stays on track. 2:39 P.M. Avoiding Both Extremes on Inflation2:35 P.M. Bernanke: "Meaningful Cumulative Progress"2:32 P.M. Calibrating the Stimulus2:31 P.M. Hedging on a Jobless Target In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. That might be the key to understanding how the Fed will conduct the taper - how quickly it will reduce its pace of asset purchases, and how long the taper will last. Here, the Fed is saying that even if the unemployment rate falls below 6.5 percent, it might keep up its asset purchases if other indicators are weak. If inflation remains below target, the labor force keeps shrinking, markets keep from frothing and long-term unemployment remains high, in other words, it might see a reason to keep its foot on the gas. 2:25 P.M. How the Language Has Changed The economy continues to expand at a "moderate pace." The labor market has shown "improvement," though unemployment remains "elevated." Household spending and business investment "advanced." Fiscal policy is "restraining" the recovery. And inflation is "running below" the Fed's objective, with expectations "stable." The first paragraph of this release matches the first paragraph from the October release almost word for word. But then, it starts to differ significantly. Rather than seeing risks to the economy "diminishing," the Fed sees them as having become "more nearly balanced." Moreover, rather than saying that it anticipates that inflation will move toward the level it is looking for in the medium term, it says it is "monitoring inflation developments carefully for evidence" that it will do so - stronger language than before, seemingly indicating some worry in the Fed. With those risks becoming more balanced and the economy growing stronger, if slowly, the Fed has chosen to taper. 2:22 P.M. More Wiggle Room in Projections The Fed extended the range of its economic projection for growth next year, giving itself more wiggle room. For example, the central bank now expects gross domestic product to grow by 2.8 to 3.2 percent next year, slightly wider on both sides from the September projection of 2.9 to 3.1 percent. On unemployment, the Fed projects unemployment for 2014 of 6.3 to 6.6 percent, slightly improved from the September range of 6.4 to 6.8 percent. But in one key measure with implications for interest rates, it lowered the band for projected inflation, suggesting short-term interest rates will remain near rock-bottom well into the future. 2:14 P.M. Markets React in Stride Despite the obsession in recent weeks over prospects for the taper, Wall Street seems to be taking the news of a mini-taper Wednesday in stride. At 2:10, the Standard & Poor's 500-stock index was up 0.7 percent, while the Nasdaq reversed an earlier loss and was up 0.2 percent. 2:12 P.M. A Tiny Taper That's one tiny taper. The Federal Reserve is taking its foot off the accelerator ever so slightly here: It is reducing its pace of asset purchases from $85 billion a month to $75 billion. It currently is holding about $4 trillion in assets total. And the Fed remains far from tapping the brake - either by raising interest rates, or by selling assets. 2:11 P.M. No Need for the Full Force And here's Binyamin Appelbaum's first take on the announcement: The Federal Reserve said Wednesday that it would reduce its monthly bond-buying campaign to $75 billion in January, beginning a retreat from its stimulus campaign, because it no longer sees the need for the full force of those efforts. 2:06 P.M. True to His Word2:05 P.M. A Single Dissent2:03 P.M. The Economic Outlook2:00 P.M. Tapering to $75 Billion2:00 P.M. Time to Taper Breaking: Fed says it will pull back on asset purchases. 1:58 P.M. The Pros and Cons on Tapering Here's what's pushing the Fed to taper. The unemployment rate has fallen to 7 percent from 7.8 percent a year ago. Employers have added more than a million jobs over the past year. The housing market is showing new strength, and rising home values have sharply reduced the number of Americans who are underwater on their mortgages. The economy is growing at a 3.6 percent annualized rate. Here's what's holding it back. Core inflation remains tame, meaning the economy is at no risk of overheating. About four million Americans have been out of a job for more than six months. Much of the decline in the unemployment rate is due to discouraged workers" dropping out of the labor force. Consumer spending has proved weak, and wages have continued to decline, in real terms, through the recovery. 1:39 P.M. Waiting for Yellen While Wednesday's news conference is the last one scheduled for Mr. Bernanke, it is not the last meeting of policy makers he will preside over. Mr. Bernanke's term as chairman ends Jan. 31, 2014. If Janet Yellen is confirmed, as expected, as his successor, she will officially take over on Feb. 1. Mr. Bernanke, therefore, will be chairman at the Federal Open Market Committee meeting on Jan. 28 and 29. If the Fed doesn't begin tapering its stimulus efforts Wednesday, and wants to let Ms. Yellen oversee that call, any decision will have to wait until March 18 and 19, when the policy making committee next meets. The succession of Ms. Yellen and the timing issue have prompted some economists to suggest that the Fed will hold off on any tapering until March. We'll find out shortly if they are right.