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In this , Tuesday, Feb. 11, 2014, file photo, Federal Reserve Chair Janet Yellen listens while testifying on Capitol Hill in Washington.Cliff Owen/The Associated Press

The stock market took a while to adjust to Federal Reserve tapering of bond purchases last year. Is it now going to need some time before it accepts interest rate hikes?

Judging from Wednesday's near-hysterical reaction to one brief comment from Fed chair Janet Yellen, it appears so. Ms. Yellen, in a press conference that followed the release of the central bank's monetary policy statement and economic assumptions, said that rate hiking could start six months after the Fed ends its bond-buying program, known as quantitative easing, later this year.

That raised the possibility of the first rate hike occurring in early 2015. Previously, most observers had expected the Fed to hold off on rate hikes until late next year. The Fed's economic assumptions added to the anxiety: Most Fed officials now see the key rate rising to 1 per cent in 2015, up from a previous expectation of 0.75 per cent.

The S&P 500 fell about 20 points immediately after Ms. Yellen's "six months" remark, with bond, gold and currency markets also jolted. The stock market has since recovered much of the lost ground; the S&P 500 is just six points below Tuesday's close, before the Fed announcement.

But the wild swings suggest that the market is easily spooked as the Fed tries to wean the economy from years of aggressive stimulus, including three rounds of quantitative easing and more than five years with the key interest rate set at about 0 per cent.

For many long-term investors, this seems nonsensical: The withdrawal of stimulus follows real economic progress, which should be good for the stock market. The U.S. unemployment rate is down to 6.7 per cent from a high of 10 per cent in 2009, the housing market is recovering and modest economic growth has replaced fears of recession. Given a choice between ongoing stimulus and an economy that doesn't need stimulus, the latter looks far preferable.

The stock market should accept this, and recent gyrations over Fed tapering offers a possible template. Last May, the Fed, then chaired by Ben Bernanke, first floated the idea of trimming its $85-billion (U.S.) in monthly bond purchases – setting off a few rounds of market turbulence that was immediately dubbed as "taper tantrums." The S&P 500 sank for a month following Mr. Bernanke's comments, for a total decline of 5.8 per cent.

But the tantrums never added up to much over the longer term. By the time the Fed announced in mid-December that it would start tapering in the New Year, the S&P 500 was 8.5 per cent higher than it was in May. And since then, the S&P 500 has risen another 2.9 per cent (as of mid-day Thursday).

Markets don't like surprises – so any hint that the Fed could reduce stimulus sooner-than-expected or at a more aggressive pace than expected, is bound to rattle stocks in the near term. They ignite fears of rising borrowing costs, a slumping economy and declining corporate profits.

However, for all the Fed's flaws in economic foresight and missteps heading into the financial crisis, withdrawing stimulus too soon sounds like a stretch right now. By its own admission, the unemployment rate remains "elevated," the recovery in the housing sector is "slow" and low inflation "could pose risks to economic performance" – which hardly sounds as though the Fed is now hell-bent on raising rates and choking off economic performance.

If anything, Ms. Yellen's comments and the Fed's economic projections should give long-term investors a good reason for feeling upbeat rather than anxious: The U.S. economy is doing okay.

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