Tuesday, December 13, 2011

Nothing Much from the Fed Other than a Few Words Changed

Carry on...

Most importantly a few hawks exit stage right in 2012, and more Yellen and Bernanke types will enter.  Also with the 'inflation is easing' commentary they take care of any issues with those who claim there should be a break from even easier money due to potential inflation pressures.

  • The Federal Reserve on Tuesday left monetary policy on hold but said financial market turbulence posed threats to economic growth, leaving the door open to further easing next year.  The Fed characterized the economy as expanding moderately despite an apparent slowing in global growth, though it added that unemployment remains elevated and housing activity depressed. "Strains in global financial markets continue to pose significant downside risks to the economic outlook," the central bank said in its post meeting statement.
  • Offering no new guidance on its evolving communications policy, the Fed repeated that it expects inflation to settle at levels at or below those consistent with its price stability mandate.  (key word "below")
Markets have sold off a tad thus far.

We're now at 3 years of "the zero bound" in rates - many more years ahead in my opinion.

Can you believe a year and a half ago the Fed was actually considering shrinking the balance sheet?

Bed time reading full report here.

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