Federal Reserve Chairman, Ben S. Bernanke, will meet with the Senate Finance Committee privately on Sept. 19 2012. Finance Committee Chairman Max Baucus described the meeting with Federal Reserve leaders as an extension of discussions he has been holding with lawmakers and people in the private sector about the fiscal cliff.
It is said that US Lawmakers are deadlocked over how to avert the fiscal cliff, particularly on tax policy. Democrats propose letting tax cuts expire for top earners while Republicans want to extend expiring tax reductions for all income levels.
In other news, Federal Reserve and the Federal Open Market Committee has just announced they would begin an open-ended program to buy $40 billion a month of mortgage debt in a bid to support the housing market and improve the pace of job growth.
The Federal Reserve said on Thursday it was launching a new program of buying $40 billion a month of mortgage-backed securities bonds that would be open ended as it sought to “improve substantially” the outlook for the labor market.
The move, leaving the program open-ended until the jobs market improves, was a “revolutionary shift in the Federal Reserve’s policy reaction function,” said Michael Gregory, senior economist at BMO Capital Markets in Toronto. The median of forecasts from 47 economists who answered a question on an unemployment target was for the jobless rate to dip to 7 percent before the Fed considers shutting down QE3.
Some economists were reluctant to peg an exact unemployment level, saying Federal Reserve Chairman Ben Bernanke and the Federal Reserve as institution would consider several aspects of the labor market, including the rate of jobs growth, when considering ending QE3. The unemployment rate stood at 8.1 percent in August and has remained above 8 percent since February 2009.
Of 58 economists polled on Friday, 49 said the Fed would buy more Treasuries once its “Operation Twist” stimulus program finishes in December.
In response to this move, the dollar fell, oil prices neared $100 a barrel and Treasurys declined as the plan by Federal Reserve Chairman Ben Bernanke and his U.S. central bank colleagues spurred investor demand for riskier assets.
Scaling back from a 113-point climb, the Dow Jones Industrial Average DJIA +0.40% gained 53.51 points, or 0.4%, to 13,593.37, the highest close since Dec. 10, 2007. It gained 2.2% on the week, tallying gains for eight of the past 10 weeks. Kraft shares ended down 0.5%. Apple Inc. AAPL +1.22% shares rose $8.30, or 1.2%, to $691.28.
The Federal Reserve is forcing investors to get out of safer investments; the search for yield is going to drive up the price of commodities, including oil,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
For every stock falling more than two gained on the New York Stock Exchange, where nearly 900 million shares traded. Industrial production contracted last month as consumer confidence unexpectedly brightened in September, with climbing stocks and home prices helping to bolster sentiment and offset escalating gasoline costs. I just hope that Federal Reserve new program can really bring some juice to US economy.