Federal Reservations

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss the Fed’s interest rate announcement, the divided cultural experiences of America’s upper and lower class, and whether or not “the American way of life” still exists.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

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Originally from Big Government

WASHINGTON (MarketWatch) -- The Federal Reserve on Wednesday said it will sell $400 billion worth of short-maturity bonds it holds and reinvest in bonds maturing between 6 and 30 years by the end of June 2012, confirming market expectations that it would revive the 1960s-era program dubbed "Operation Twist." By a 7-to-3 vote, the Fed also said it will reinvest proceeds from maturing mortgage-backed securities into mortgage-backed securities, instead of its previous practice to buy Treasurys with the proceeds. The Fed kept its target Federal funds rate between 0% and 0.25% and kept its pledge, first announced in August, to keep rates at exceptionally low levels through the middle of 2013. The Fed said that "economic growth remains slow" and inflation will settle at or below levels consistent with its dual mandate.

Originally from MarketWatch

The Federal Reserve played its part well, along with the Treasury Department, the White House, and Congress, in helping prevent the financial meltdown of 2008-2009 from turning the ‘Great Recession’ of 2007-2009 into the next Great Depression. But its solo intervention with its QE2 quantitative easing program last year to boost the again faltering economy seems to have only delayed the business cycle.

Originally from The Market Oracle

From Fed Chairman Ben Bernanke: The Near- and Longer-Term Prospects for the U.S. Economy

Monetary policy must be responsive to changes in the economy and, in particular, to the outlook for growth and inflation. As I mentioned earlier, the recent data have indicated that economic growth during the first half of this year was considerably slower than the Federal Open Market Committee had been expecting, and that temporary factors can account for only a portion of the economic weakness that we have observed. Consequently, although we expect a moderate recovery to continue and indeed to strengthen over time, the Committee has marked down its outlook for the likely pace of growth over coming quarters. With commodity prices and other import prices moderating and with longer-term inflation expectations remaining stable, we expect inflation to settle, over coming quarters, at levels at or below the rate of 2 percent, or a bit less, that most Committee participants view as being consistent with our dual mandate.

In light of its current outlook, the Committee recently decided to provide more specific forward guidance about its expectations for the future path of the federal funds rate. In particular, in the statement following our meeting earlier this month, we indicated that 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 mid-2013. That is, in what the Committee judges to be the most likely scenarios for resource utilization and inflation in the medium term, the target for the federal funds rate would be held at its current low levels for at least two more years.

In addition to refining our forward guidance, the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus. We discussed the relative merits and costs of such tools at our August meeting. We will continue to consider those and other pertinent issues, including of course economic and financial developments, at our meeting in September, which has been scheduled for two days (the 20th and the 21st) instead of one to allow a fuller discussion. The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate to promote a stronger economic recovery in a context of price stability.

Originally from Calculated Risk

With commodity prices retreating and fears of a recession mounting, an increasing amount of economists and bond investors believe that the Federal Reserve Chairman Ben Bernanke may signal during August 9th's Fed meeting that it will purchase Treasury securities with maturities of 10 years or greater in order to stimulate the economy.

Originally from All News, Video and Posts related to TOPIC: Federal Reserve

WASHINGTON (Reuters) - The Federal Reserve faces a high bar for further monetary stimulus in the absence of deflation risks, but could maintain rock-bottom borrowing costs for a long time, a top central bank official said on Monday.

Originally from Reuters: Business News

Shah Gilani writes: Divining the direction of interest rates used to be a lot easier. With the Federal Funds Rate, policymakers at the U.S. Federal Reserve would indicate precisely what they wanted the overnight lending rate between big banks to be. And the prices of U.S. Treasury securities of all maturities fell in line like obedient soldiers.

Originally from The Market Oracle

While it’s true that history repeats itself, the patterns should always be separated by a generation or two to keep things respectable. Unfortunately, in today’s economic world, it seems the cycle can be counted in months.

On July 24, 2009, just as the Federal Reserve unleashed its first quantitative easing campaign (now called “QE1″ - an echo of the reclassification of the Great War after still more destructive subsequent developments), Fed Chairman Ben Bernanke wrote an opinion … [visit site to read more] or compare Best Credit Cards and Best CD Rates

Originally from DailyMarkets.com

Fed Chairman Bernanke can move on from his warning of a couple of months ago that there are “unusual uncertainties” in the economy. There may still be uncertainties in the stock market, but no longer in the economy! It is almost surely headed into a recessionary period again.

Originally from The Market Oracle

WASHINGTON (Reuters) - The Federal Reserve's list of worries may be getting longer.

Originally from Reuters: Business News