Thursday, August 2, 2012

The Fed Does Nothing - For Now

The Federal Reserve Open Market Committee emerged from its latest meeting yesterday and acknowledged that the economy had "decelerated somewhat over the first half of the year." But at the same time, the Fed chose to forgo further steps to stimulate the economy, although Fed chair Ben Bernanke indicated that more moves may be in the offing.

For now, the Fed will leave in place Operation Twist, the strategy of selling short-term debt and buying long-term debt, with the purpose of keeping interest rates low. That's certainly been a success, with 30-year mortgage rates at record lows. The Fed also indicated that it will keep its Fed Funds rate at near-zero levels through the end of 2014.

Still, many Fed watchers expect further stimulative measures when the group meets again on September 12. About half of the economists surveyed by Bloomberg News thought the Fed would announce more asset purchases at that time.

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