Fed: Rates To Stay Ultra Low Till At Least 2015
With growth in the US stuck in low gear and with headwinds at home and especially from abroad still front and center, the Fed has chosen to keep rates exceptionally low for now not only "an extended period of time," but through at least the end of 2014, if not beyond.
Such aggressively low rates are pretty much unprecedented in the United States. One really has to look to Japan for a similar example. And even with rates staying so low, the Fed acknowledges that the risks are weighted to the downside. In other words, there is a greater risk of renewed recession in the US than there is near-term inflation, or too much growth.
Bloomberg
Fed: Benchmark Rate Will Stay Low Until Late 2014
Federal Reserve officials said their benchmark interest rate will stay low until at least late 2014 and anticipate that unemployment will remain high and inflation “subdued.”
“The Committee expects to maintain a highly accommodative stance for monetary policy,” the Federal Open Market Committee said in a statement released in Washington today. “Economic conditions -- including low rates of resource utilization and a subdued outlook for inflation over the medium run -- are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.” ...
Operation Twist
The Fed said it would continue to extend the average maturity of its $2.6 trillion securities portfolio, a move dubbed “Operation Twist.” The Fed also maintained its policy of reinvesting maturing housing debt into agency mortgage-backed securities...
Europe Crisis
...For the U.S., “the top risks are unemployment and Europe,” said Drew Matus, senior U.S. economist at UBS Securities LLC and a former New York Fed staff member.
UBS estimates that every 0.7 percentage point decline in euro-area growth cuts U.S. output by 0.3 point. The IMF yesterday forecast the 17-nation euro area would shrink 0.5 percent this year...
Such aggressively low rates are pretty much unprecedented in the United States. One really has to look to Japan for a similar example. And even with rates staying so low, the Fed acknowledges that the risks are weighted to the downside. In other words, there is a greater risk of renewed recession in the US than there is near-term inflation, or too much growth.
Bloomberg
Fed: Benchmark Rate Will Stay Low Until Late 2014
Federal Reserve officials said their benchmark interest rate will stay low until at least late 2014 and anticipate that unemployment will remain high and inflation “subdued.”
“The Committee expects to maintain a highly accommodative stance for monetary policy,” the Federal Open Market Committee said in a statement released in Washington today. “Economic conditions -- including low rates of resource utilization and a subdued outlook for inflation over the medium run -- are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.” ...
Operation Twist
The Fed said it would continue to extend the average maturity of its $2.6 trillion securities portfolio, a move dubbed “Operation Twist.” The Fed also maintained its policy of reinvesting maturing housing debt into agency mortgage-backed securities...
Europe Crisis
...For the U.S., “the top risks are unemployment and Europe,” said Drew Matus, senior U.S. economist at UBS Securities LLC and a former New York Fed staff member.
UBS estimates that every 0.7 percentage point decline in euro-area growth cuts U.S. output by 0.3 point. The IMF yesterday forecast the 17-nation euro area would shrink 0.5 percent this year...