Archives for September 2013
Release Date: September 18, 2013
For immediate release
Information received since the Federal Open Market Committee met in July suggests that economic activity has been expanding at a moderate pace. Some indicators of labor market conditions have shown further improvement in recent months, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen further and fiscal policy is restraining economic growth. Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall, but the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.
Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases. Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee 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 and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee’s dual mandate.
The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. In judging when to moderate the pace of asset purchases, the Committee will, at its coming meetings, assess whether incoming information continues to support the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective. Asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s economic outlook as well as its assessment of the likely efficacy and costs of such purchases.
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Charles L. Evans; Jerome H. Powell; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause
an increase in long-term inflation expectations.
We haven’t updated in awhile, quite frankly getting sickened with all the lies from the powers that be, the ignorance of the general public believing it for the most part, and the highly paid media adhering to their reporting guidelines.
Soooo without further ado, here’s our take 1 on the recent happenings that have had gold and silver swinging like a pendulum over the last sixty/ninety days.
First and foremost we will address the supposed tapering from The Federal Reserve’s notorious Ben Bernanke.
As over 70% of the countries top economists thought a tapering of some sort was coming due to the happenings at Jackson Hole, their ended up being an empty easter egg at the end of it all. What these lucky, “stick to your story long enough and you will eventually be right” economists failed to pay any attention to was, the pressure Bernanke received from the international community, mainly from the managing director of the International Monetary Fund during the recent Ambrosetti forum in Northern Italy. One interview with CNBC though not directly sent to anyone in particular, says it all;
“Very negative spill-over effects on the emerging market economies could very much backfire on other economies. So to assume that [the] domestic economy is totally isolated, that a country is an island, would not be the right approach,”
“On the other hand, the advanced economies acknowledged that the tapering of the unconventional monetary policies, though left to the central banks, had to be orderly, well communicated and had to be done in dialogue with other economies of the world,” Lagarde told CNBC on the sidelines of the Ambrosetti Forum
To think that a mere personal desire by Mr. Bernanke to slow down our massive financial printing press before he leaves his seat is a little naive….Bernanke does answer to higher powers.
And no, the unemployment and inflation numbers did not justify a decrease either, according to Bernanke’s own criteria
There were discussions concerning the Feds tapering held at the G20 summit as well, where everyone’s focus was on the Syrian gas topic. Not one of these economists I heard of that said a taper was inevitable paid attention to any discussions concerning the financial situation that went on in Russia. The fact that a joint statement was put out by the BRIC countries concerning a fund which is meant to help stabilize the volatility that will arise in the global currency markets when the pullback of monetary stimulus happens in the U.S. was not heavily mentioned in US media. The fund was supposed to be $240 billion, but only $100 billion was committed to by BRIC members. The conclusion that was arrived at during the summit was that the funds would not be functional for some time yet.
In other words…. don’t taper Mr. Bernanke, we need a lil more time. Please!
Simply put, the international community knows things will implode as soon as the juice is gone, evident by Lagardes following comment;
“Yes, we will talk about hiccups on the road, we will talk about bumps and we will talk about difficulties and there will be little casualties here and there but there has been huge progress,” (quote was made in regards to the EU recovery)
Keep in mind, “little casualties” to the individuals involved in these discussions are catastrophic to others. Position yourself accordingly.
Quotes in this article were pulled from Ansuya Harjani’s | CNBC interview
-By CNBC’s Ansuya Harjani; Follow her on Twitter @Ansuya_H