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The Fed came out blazing today, not that it will
matter one iota to jobs (because
it won't). Please consider a few snips from the FOMC
Official Press Release.
To support a stronger economic recovery and to help ensure that inflation, over
time, is at the rate most consistent with its dual mandate, the Committee
agreed today to increase policy accommodation
by purchasing additional agency mortgage-backed securities at a pace of $40
billion per month. The Committee
also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining
its existing policy of reinvesting principal
payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term
securities by about $85 billion each
month through the end of
the year, should put downward pressure on longer-term
interest rates, support mortgage
markets, and help to make
broader financial
conditions more accommodative.
The Committee will closely monitor incoming
information on economic and financial
developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other
policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the
size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.
To support continued progress
toward maximum employment
and price stability, the Committee expects that a highly accommodative
stance of monetary policy
will remain appropriate for a considerable
time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent
and currently anticipates
that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.
Desperation Bazooka Tactics
This seems like desperation bazooka tactics.
It also leave me wondering, if this does not work (and it won't), what
else can the Fed do?
Promise to hold rates low
forever? Buy every treasury and agency?
Gold Responds
After the market makers cleared every stop to the downside,
gold blasted higher. Curiously, the US dollar barely
budged.
That is one hell of a downside headfake, to the tune
of $40, after which gold moved $75 in the other
direction.
Addendum:
Note to All Facebook Users: If you have not yet voted for your favorite charity (it costs
nothing to vote), please
do so. Chase is giving away $5 million to charity, and I have a cause that I support.
Please click on this this link: Facebook Users, I Have a Favor to Ask, then follow the instructions.
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