Bubble ben bernanke signaling no rush for the exit, nothing like artificial growth!!!

Discussion in 'Economics' started by S2007S, Apr 26, 2011.

  1. S2007S


    Why would Bubble ben bernanke want to rush an end to the massive support he has thrown into the markets and economy, why stop now and end the propping of the markets? Seems like its been going great, I mean one day before his meeting markets are continuing to break out and touch yearly highs. Why put an end to all the stimulus and trillions of dollars when he can keep pumping it into the system and create artificial growth! Everything has been and will continue to be smoke and mirrors, as long as he keeps all this stimulus in place "growth" is nothing more than artificial growth, smoke and mirrors if you know what I mean. Everyone can believe the economy is doing fine but in reality its just another asset bubble taking place!!

    Fed seen signaling no rush for the exit

    U.S. Federal Reserve Chairman Ben Bernanke addresses the Independent Community Bankers of America's (ICBA) 2011 National Convention in San Diego, California March 23, 2011. REUTERS/Mike Blake
    On Tuesday April 26, 2011, 3:22 pm

    By Mark Felsenthal

    WASHINGTON (Reuters) - The Federal Reserve kicked off a two-day meeting on Tuesday that will probably show that it is in no hurry to scale back its massive support for the economic recovery.

    The central bank is expected to confirm that it will complete its $600 billion bond-buying program by the end of June and renew its commitment to maintain rock-bottom borrowing costs for "an extended period."

    Investors are now waiting to hear what the Fed will do after June. Signs from policymakers so far have mostly suggested it will wait and see how the fragile U.S. economic recovery develops before tightening monetary conditions.

    The Fed is expected to release its post-meeting statement at 12:30 p.m. ET on Wednesday.

    Chairman Ben Bernanke will then hold the first-ever regularly scheduled news conference by a Fed chief at 2:15 p.m. ET. It is expected to last about 45 minutes.

    "Investors are unlikely to learn from Bernanke when the Fed will tighten as it is doubtful that he himself knows," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.

    The Fed launched the latest bond-buying program in November last year to support a flagging recovery, having already cut interest rates to near zero in December 2008 and bought $1.4 trillion in longer-term securities to pull the economy out of recession.

    Fed officials say their efforts have helped buoy growth and point to faster hiring by businesses as well as stock market gains.

    However, the program has drawn criticism from some U.S. lawmakers and from emerging economies such as China and Brazil who blame it for fueling inflation.

    Financial markets anticipate the central bank will be in no rush to tighten financial conditions because the jobless rate stood at 8.8 percent in March.

    Furthermore economic growth in the first three months of the year is expected to have slowed to an annualized 2.0 percent or lower. Data on first-quarter growth is due on Thursday.

    Expectations that Fed will not raise interest rates until sometime next year have pushed down the value of the U.S. dollar which hit a 16-month low against the euro on Tuesday. The European Central Bank raised its benchmark rate earlier this month, its first hike since the financial crisis struck.

    U.S. government bond prices rose on Tuesday as traders judged inflation was not yet troubling enough to push the Fed to raise rates and bet other buyers would fill the void once the central bank's buying ends.

    As well as its inaugural news conference, the Fed will make another change to make itself more transparent by issuing quarterly forecasts for growth, employment, and inflation as the news conference begins.

    Until now, the forecasts were released only three weeks after each meeting along with minutes of the discussions.

    Economists will look to see whether the Fed has bumped up its inflation forecasts, which could be a sign it is growing a bit more nervous that high oil costs are pushing up prices for a wider array of goods and services.