Now we are talking about US Federal Reserve Meeting that shall take place on Wednesday for two days. From what I read on the internet, many economist thinks that the US Federal Reserve Meeting shall bring quite radical move to bost US economy.
Others foresee a more measured response when the Federal Reserve ends a two-day policy meeting Thursday. In August, job growth slowed sharply. The unemployment rate did fall to 8.1 percent from 8.3 percent. Chronic high unemployment was a theme Fed Chairman Ben Bernanke spotlighted in a speech to an economic conference in Jackson Hole, Wyo., late last month. Bernanke argued that QE and other unorthodox Federal Reserve actions had helped ease borrowing costs and boosted stock prices.
Market participants also expect the Federal Reserve to extended the period during which it forecasts its benchmark lending rate will remain exceptionally low. If the Federal Reserve were to move to economic targets, 55 percent support inflation, 40 percent nominal GDP and 36 percent unemployment.
One quarter of respondents think the euro zone has a chance of remaining intact five years now, up from just 11 percent in the July survey. The chance that some countries will be ejected or leave fell to 72 percent from 82 percent. For example, in March survey respondents put the probability of default by Portugal at 53 percent. It dropped to 34 percent in the September survey. The threat of the European crisis was chosen by just 24 percent, down from 30 percent in the prior survey.
The threat posed by slow job growth was chosen by 15 percent of market participants, up 8 points from July and now in third place ahead of tax and regulatory policies
Federal Reserve Chairman Ben Bernanke made plain last month that the central bank would consider easing monetary policy further this week when he called the labor market’s stagnation a “grave concern.”
The Fed will follow at 2 p.m. (1800 GMT) with new economic and interest rate projections, updated to include 2015, and Bernanke will hold a news conference 15 minutes later.
Federal Reserve officials are highly likely to extend into 2015 the so-called forward guidance they offer on how long they expect to keep overnight interest rates between zero and 0.25 percent.
So far, the Federal Reserve has bought $1.4 trillion of mortgage and housing agency debt and $900 billion in Treasuries.
Reducing the rate – or even charging a negative interest rate to make banks pay for the security of parking spare funds with the Fed – could encourage banks to increase lending.
Fed officials said at their last meeting they would watch the experience of the European Central Bank, which has already cut this rate to zero, for clues on how well the strategy works.
Fed officials are also intrigued by the so-called Funding for Lending scheme developed by the Bank of England and British Treasury to provide banks with an incentive to boost their lending to the private sector.
Some critics, inside and outside the Federal Reserve, remain opposed to further bond buying. Some economists who doubt the Fed is about to begin more bond buying say the European Central Bank has eased some pressure on the Fed. Many Republicans have been critical of the Fed’s unconventional methods to boost the economy. After the financial crisis struck in 2008, the Fed bought more than $2 trillion in Treasury and mortgage-backed securities.
Reinhart thinks the Fed will prefer to wait until at least December before announcing more bond buying.
If the Federal Reserve does unveil QE3, some economists think it might differ from the previous bond-buying programs. With its earlier purchases, the Fed announced a dollar amount and a time frame for the bonds it planned to buy.
This time, any new bond-purchase program might be more open-ended. Three regional Fed bank presidents — Eric Rosengren of Boston, James Bullard of St. Louis and Charles Evans of Chicago — have expressed openness to a program in which the Fed would buy bonds until the economy improved significantly and unemployment fell consistently — as long as inflation remained tame.
Of those who think QE is coming, 77 percent believe it will be launched at the current meeting, which ends Thursday, and 86 percent think the Fed will purchase a mix of Treasurys and mortgage-backed securities.
Despite expectations for QE, investors are fairly pessimistic that it will help the job market. Just 36 percent of respondents think QE will help lower the unemployment rate with 60 percent saying it won’t.
I just hope that US Federal Reserve Meeting run smoothly and provide clear direction to step up US Economy.