BUBBLE ben bernake knows how to stimulate the economy and the stock market.....I cant wait until 2014 comes and rates are still at 0% because not only will they be 0% into 2014 but 2015, 2016,2017 and most likely into 2020. Fed extends low-rate vow in bid to help economy ReutersReuters â 14 minutes ago By Pedro da Costa and Mark Felsenthal WASHINGTON (Reuters) - The Federal Reserve on Wednesday said it will likely not raise interest rates until at least late 2014, much later than it had said previously, as it nurses a still-sluggish economic recovery. The Fed, after a two-day policy meeting, repeated its view that the economy faces "significant downside risks" but it offered little to suggest it was close to launching another round of bond-buying to prop up growth. It did say, however, that it would maintain a "highly accommodative" monetary policy stance. Economic conditions "are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014," the central bank said in a statement. Many investors had expected the Fed to push its expectations for the first rate hike into 2014, but few had thought it would be late in the year. After every previous policy meeting dating back to August, the Fed had said rates were not likely to rise until mid-2013. The central bank also appeared more sanguine on the inflation outlook, suggesting prices were now rising at a pace consistent with policymakers' goals. The statement also dropped a reference saying the Fed was monitoring inflation and inflation expectations. U.S. government debt prices rose sharply after the announcement, pushing long-term interest rates lower, while the dollar fell against the euro. Stocks prices moved into positive territory. Aside from the 2014 rate pledge, the Fed's statement hewed closely to its last policy pronouncement in mid-December. It described the unemployment rate as still elevated and said it expects inflation to remain at levels consistent with stable prices. In a slight shift, it acknowledged signs that business investment has slowed. "I think what they are seeing is that the rate of growth is not sufficient to bring down the unemployment rate," said Brian Dolan, chief strategist at FOREX.com in Bedminster, New Jersey. Richmond Federal Reserve Bank President Jeffrey Lacker, an inflation hawk who rotated into a voting seat this year, dissented against the decision. He preferred to omit the description of the time period for ultra-low rates. NEW TRANSPARENCY STEPS As part of an effort to provide more insight on its thinking to financial markets and the public, the Fed later on Wednesday will begin publishing individual policymakers' projections for the appropriate path of the benchmark federal funds rate. That release is scheduled for 2 p.m. (1900 GMT) In response to the deepest recession in generations, the Fed slashed the overnight federal funds rate to near zero in December 2008. It has also more than tripled the size of its balance sheet to around $2.9 trillion through two separate bond purchase programs. The policy is credited with having prevented an even more devastating downturn, but it has been insufficient to bring unemployment down to levels considered normal during good economic times. In December, the U.S. jobless rate stood at 8.5 percent, and some 13 million Americans were still actively looking for work but could not find it. While forecasters expect the U.S. economy grew at a 3 percent annual rate in the last three months of 2011, they look for growth of just around 2 percent this year. Fed officials appear likely to bide their time in determining whether more monetary stimulus is needed. Many economists expect they will eventually decide on another spurt of Fed bond buying - probably one focused on mortgage debt. There is a possibility officials will announce an explicit inflation target later on Wednesday, perhaps a hard marker of 2 percent or a range of 2 percent or a bit below. The Fed has been debating a statement on its long-run goals, but whether one will be released is unclear. Analysts said the Fed's shift in communications will put an even greater emphasis on a post-meeting news conference by Fed Chairman Ben Bernanke set for 2:15 p.m. (1915 GMT). "The chairman is likely to remain non-committal to any additional policy easing, but he is likely to reinforce the Fed's commitment to 'review the size and composition of its securities holdings' and be 'prepared to adjust those holdings as appropriate,'" said Millan Mulraine, senior macro strategist at TD Securities.
Get ready because 17 members of the fed are going to release their idea of when rates should move higher, should be lots of fun!
i see 2 members said low rates till 2016... that is stupid how can anyone predict what is going to happen with the economy in 5 years? why dont they just put 0 rates forever if they want to inflate markets!!!
Exactly. It makes a mockery of this whole notion that they "vigilantly" monitor the economy for symptoms of "inflationary pressures", etc, etc... So now they figure another 2-4 years of ZIRP is in order, no matter what commodity prices might have to say about it in the interim.
Thats what I was thinking, how can they predict anything so far out, go back to the height of housing boom when BUBBLE ben bernanke said that the economy was headed for a soft landing, he actually had no clue what was going on, he kept predicting a stronger economy moving forward, but everyone knows what happened in 2008.... it was all fucking lies, thats all they do is lie, they have no clue what to do, so why not just keep rates at 0% for the next decade, yep thats the answer!
If it's that easy, just make rates negative and mail everyone $1 million dollar checks. There's no reason to stop at QE2 and ZIRP. Reductio ad absurdum. You're completely ignoring the trade-offs and unintended consequences. But you make a good sheep.
US is bankrupt. Ben is just choosing implicit default over an explicit one. Feels much better and doesn't leads to global panic. Also works great for cooking frogs slowly! S&P2000 here we come!
Wow everyone here wants higher interest rates. Baffling. Go refinance your homes at the low rates or buy another home at theses low rates if you've been waiting. If you own a business buy equipment, the banks are lending to small businesses. As far as savings are concerned, damn, guys you are on a trading site, research some stocks or some corporate bonds and put your savings there. Or take your savings and buy some income producing property and take advantage of the low rates. Use your heads figure out a way to benefit from the low rates, or just keep on bitching.
BUBBLE ben bernake is talking right now, as usual he sounds like he is a bit nervous...... All it is is more dribble because thats all he knows....blah blah blah, blah blah blah.....all his projections are totally off, this is the same guy who said that there was no bubble in housing back in 2007 and said that the economy was headed for a soft landed. hahah