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Fed holds rates steady, QE2 to end on schedule
Marketwatch ^ | 4/27/11 | By Greg Robb

Posted on 04/27/2011 10:14:31 AM PDT by demsux

WASHINGTON (MarketWatch) - The Federal Reserve's Federal Open Market Committee on Wednesday left its key interest rate at an historic low range of 0% to 0.25% and said its $600 billion bond-buying program would end as scheduled on June 30. Inflation has picked up and the Fed now says the economic recovery is proceeding at "a moderate pace," but the central bank still said the inflation pickup will be temporary and the jobs market is still a concern. The decisions were widely expected. The FOMC made only few changes to the language of the policy statement it issued in March and did not give guidance on the outlook of policy after the end of quantitative easing. The FOMC repeated that rates are likely to stay low for an "extended period." The Fed gave itself flexibility by adding that it would "adjust" its holdings of Treasurys and mortgage-backed securities as needed. Attention now turns to Fed chairman Ben Bernanke's first-ever news conference scheduled to begin at 2:15 p.m. Eastern. The Fed will also release its updated economic forecasts for 2011 and 2012 just before the press conference begins.

(Excerpt) Read more at marketwatch.com ...


TOPICS: Breaking News; Business/Economy; Government; News/Current Events
KEYWORDS: bernanke; fed; federalreserve; qe2; thefed; theqe2
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The Fed is out of bullets...a classic Liquidity Trap...they attempt to hold down rates with QE2, but rates are rising and will continue to rise.
1 posted on 04/27/2011 10:14:36 AM PDT by demsux
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To: demsux

Hold Steady? Is this the same “steady” while our dollar is plummeting? Oil prices are skyrocketing? The debt is out of control? Inflation is slapping us?


2 posted on 04/27/2011 10:22:28 AM PDT by tobyhill
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To: tobyhill
Bernacke says the inflation is "transitory"...THAT would be a new economic phenomenon.

They can keep printing money, but it will not suppress interest rates much longer. Rates will rise, quite a bit, and then you will see it ripple through the economy as REAL INFLATION.

3 posted on 04/27/2011 10:25:48 AM PDT by demsux (Obama: THE job destroyer)
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To: demsux
Followup article:

Fed holds rates, bond-buy plan ahead of conference

4 posted on 04/27/2011 10:27:55 AM PDT by Free Vulcan (Vote Republican! You can vote Democrat when you're dead.)
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To: demsux

Stick to the REALLY important issues like the Birth Certificate.


5 posted on 04/27/2011 10:34:17 AM PDT by PSYCHO-FREEP (Patriotic by Proxy! (Cause I'm a nutcase and it's someone Else's' fault!....))
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To: Free Vulcan
From your follow up: Economists say that higher prices at the pump dampen growth because consumers have less discretionary income to spend, but also can boost inflation. It is still unclear which of these two factors will dominate.

Dampened growth and inflation are NOT mutually exclusive. Think Stagflation.

Jimmy Carter redux.

6 posted on 04/27/2011 10:37:32 AM PDT by demsux (Obama: THE job destroyer)
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To: demsux
The Fed gave itself flexibility by adding that it would "adjust" its holdings of Treasurys and mortgage-backed securities as needed.

Here's the money statement. Just as I surmised last week. The Fed declares "victory" over the "improving" economy, says no more QE is needed after #2, and then as soon as the economy and the markets take another downturn from no longer being pumped up, the Fed will call it something else, but it will in fact be more QE whether it's QE2.1 or QE3.0.

7 posted on 04/27/2011 10:56:16 AM PDT by OB1kNOb (Our new state slogan: “Welcome to Arkansas. TAKE COVER !”)
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To: demsux

Yup, you got it. We’re going to get crushed between both.


8 posted on 04/27/2011 10:59:39 AM PDT by Free Vulcan (Vote Republican! You can vote Democrat when you're dead.)
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To: OB1kNOb

Noticed that too...didn’t say “decrease” holdings.


9 posted on 04/27/2011 11:00:35 AM PDT by demsux (Obama: THE job destroyer)
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To: OB1kNOb

“The Fed declares “victory” over the “improving” economy, says no more QE is needed after #2, and then as soon as the economy and the markets take another downturn from no longer being pumped up, the Fed will call it something else, but it will in fact be more QE whether it’s QE2.1 or QE3.0.”

Exactly.

I very much doubt the Fed could stop monetizing the debt without bringing the government to a crashing halt. Are there enough investors to buy all the debt we need to issue if the Fed gets out of the market? When QE2 ends the Fed will have to replace it with some other mechanism for accomplishing the same end. If it doesn’t we won’t be able to beg, borrow, steal or print enough money to keep the federal government functioning. Nobody in the governing class wants to see the federal government bouncing checks; the Fed will keep the monetary shell game going long after our currency is destroyed.


10 posted on 04/27/2011 11:11:39 AM PDT by fluffdaddy (Who died and made the Supreme Court God?)
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To: demsux

11 posted on 04/27/2011 11:23:49 AM PDT by Atlas Sneezed (...a.k.a. "Norm L. C. Bias")
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To: PSYCHO-FREEP
Stick to the REALLY important issues like the Birth Certificate. following the US Constitution. Quaint idea I know.

Fixed.

12 posted on 04/27/2011 11:41:48 AM PDT by central_va (I won't be reconstructed, and I do not give a damn.)
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To: OB1kNOb
the Fed will call it something else, but it will in fact be more QE whether it's QE2.1 or QE3.0.

Bernanke has really instilled confidence in the dollar. [/sarcasm]

With two trillion in Chinese short term debt to be absorbed, I was thinking they will rename it "Vista 1.0". The dictionary definition is "2. A mental view of a succession of remembered or anticipated events: "vistas of freedom"".

Bullion has shot up again.

The manipulation is not working and the dollar is dead. The Chinese have stated they will buy a trillion dollars (primarily metals) of commodities and the remainder in a basket of currencies.

The two trillion will be in addition to this years deficit. Hyperinflation is a guarantee.
13 posted on 04/27/2011 12:20:29 PM PDT by PA Engineer (Time to beat the swords of government tyranny into the plowshares of freedom.)
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To: PSYCHO-FREEP

Good comment. I was listening to the end of the Rush Limbaugh show a half hour ago. Without warning, he wrapped the show up by saying that, due to the (political) stresses of the last few days, he’s taking the next two days off to “think deeply about where I am and about where we are.” He had just been hearing something from the first-ever Bernanke press conference that really disturbed him. Regarding that, his last words of the show were “People are lying to us. That’s why I need a few days.”

I immediately came to FR, expecting to see a LIVE thread on this first-ever press conference, that might help me figure out what Limbaugh was talking about, only to find...billions of threads on the BC.


14 posted on 04/27/2011 12:45:06 PM PDT by lonevoice (Where the Welfare State is on the march, the Police State is not far behind)
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To: Stillwaters
The Federal Reserve's Federal Open Market Committee released their economic report today, following which Bernanke gave his first ever news conference, including Q & A. During his news conference, the price of gold quickly shot up $18 and has now closed up $22.40.

Something about all of this disturbed Rush Limbaugh enough today, that in a very unusual move, he announced he's taking the next few days off to study deeply what is going on and where we are. His last comment was: "People are lying to us."

Keep a watch on this. Something's up.

15 posted on 04/27/2011 1:23:17 PM PDT by lonevoice (Where the Welfare State is on the march, the Police State is not far behind)
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To: fluffdaddy

“I very much doubt the Fed could stop monetizing the debt without bringing the government to a crashing halt. Are there enough investors to buy all the debt we need to issue if the Fed gets out of the market?”

_______________________________________________________________
How about if they change the laws regarding 401-(k)’s and force us to buy Treasuries with our retirement contributions? The American people get to finance the debt. It will be presented to them as their “patriotic duty”. They receive a ‘guaranteed” 3% and never lose a penny!

Congress could pass a law, president signs it, and it’s done!


16 posted on 04/27/2011 1:29:06 PM PDT by Deo volente (God willing, America will survive this Obamination.)
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To: lonevoice

Dang it, I missed the last few minutes! But he was on fire before that, and sounded very angry.

Prayers for his safety...really.


17 posted on 04/27/2011 1:31:24 PM PDT by Deo volente (God willing, America will survive this Obamination.)
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To: lonevoice
. Without warning, he wrapped the show up

Interesting. I had just turned off the radio a few minutes before that.

18 posted on 04/27/2011 1:38:01 PM PDT by steve86 (Acerbic by nature, not nurture (Could be worst in 40 years))
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To: Deo volente

Hope bonds


19 posted on 04/27/2011 1:40:29 PM PDT by bert (K.E. N.P. N.C. D.E. +12 ....( History is a process, not an event ))
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To: Deo volente
“How about if they change the laws regarding 401-(k)’s and force us to buy Treasuries with our retirement contributions?”

Congress wouldn't dare pass it, and the President wouldn't dare sign it. The law you suggest would also be impossible to implement without violence on a grand scale. It would be the persecution of the Kulaks translated into the Information Age. The modern left just doesn't have the guts to try. The USA is much diminished from its glory days, but it still isn't Argentina.

20 posted on 04/27/2011 1:51:06 PM PDT by fluffdaddy (Who died and made the Supreme Court God?)
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