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Fed To Continue Bond-Buying Program

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WASHINGTON — At their first meeting of the year, Federal Reserve policy makers voted unanimously on Wednesday to continue the central bank’s controversial $600 billion plan to spur the recovery by buying government bonds.

The Fed did note that commodity prices had risen, but cautioned that long-term inflation expectations had been stable and that measures of underlying inflation had continued to trend downward.

The acknowledgment about rising commodity prices was a slight but significant nod to the danger that the bond-buying plan could eventually touch off inflation.

As expected, the Fed left its benchmark short-term interest rate — the federal funds rate, at which banks borrow from each other overnight — at a range of 0 to 0.25 percent, where it has been since December 2008.

The unanimity within the Federal Open Market Committee, the Fed panel that sets monetary policy, was a welcome and somewhat surprising vote of confidence for the Fed’s chairman, Ben S. Bernanke, who has shown a willingness since the crisis to use aggressive and unconventional measures to stimulate the economy, even in the face of criticism.

Under a rotation system used by the committee, four different regional Fed presidents joined the panel as voting members this year: Charles I. Plosser of the Federal Reserve Bank of Philadelphia, Richard W. Fisher of the Dallas Fed, Charles L. Evans of the Chicago Fed and Narayana R. Kocherlakota of the Minneapolis Fed.

Mr. Plosser and Mr. Fisher have been outspoken skeptics of the bond-buying program, which the Fed announced in November after hinting about it since August. The program is intended to lower long-term interest rates, give a lift to stocks and other assets, and ease the flow of credit.

Long term, are they talking about the next 1000 years?

As long as they ignore food/fuel inflation will be contained.

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Release Date: January 26, 2011

For immediate release

Information received since the Federal Open Market Committee met in December confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions.

Actually, labor market conditions are deteriorating, and the FOMC is lying through its teeth.

Growth in household spending picked up late last year, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, while investment in nonresidential structures is still weak. Employers remain reluctant to add to payrolls. The housing sector continues to be depressed. Although commodity prices have risen, longer-term inflation expectations have remained stable, and measures of underlying inflation have been trending downward.

The housing sector sucks and commodity prices are not "rising", they're shooting the ****ing moon! How many days has cotton been lock-limit up again?

As for credit, the entire reason we're in this mess is too much of it. Yeah, I know, the FOMC wants more. Here junkie, have another hit of crystal meth. Yeah, I know, your teeth are falling out and you look like a crazed zombie (and you might actually be) but heh, it's all I know to suck off more of your money.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow.

The actual mandate is for stable prices. Stable means just that - no change. Never mind that all economies are naturally deflationary due to productivity improvement. That fact isn't lost on me, or my readers, but it sure is on the "Cognescenti" in Washington DC and elsewhere.

Either that or they're lying. Pick one.

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.

The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.

You've done such a great job over the last 100 years, why not continue ****ing it up?

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

Heh look Maw, we're gonna all hang together this time......

Dennigers view.

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      • down 5% +
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