Worthy of note: The Fed intends to slow the purchases of MBS and agency debt with the goal of wrapping it up by the end of 2010Q1. This is the first that they have given a date for that. They reaffirmed the commitment to wrap up the purchase of $300 billion in Treasury securities by the end of next month. In addition, the tone of the outlook is, though not exactly rosy, decidedly more optimistic than it was in the previous release.Information received since the Federal Open Market Committee met in August suggests that economic activity has picked up following its severe downturn. Conditions in financial markets have improved further, and activity in the housing sector has increased. Household spending seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.
With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.
In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve 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 are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt. The Committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010. As previously announced, the Federal Reserve's purchases of $300 billion of Treasury securities will be completed by the end of October 2009. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
September 2009 Archives
The latest stimulus showdown in the Senate: should money from the $787 billion package pay for signs that say a project is being funded with stimulus money?
No way, said New Hampshire Republican Sen. Judd Gregg, who today tried to ban funding for the signs, which are prominently displayed at the highway projects around the country. "Considering the questionable effectiveness of the stimulus bill, it is completely unreasonable that signs are being constructed at a price tag of hundreds to thousands of dollars apiece for lawmakers to pat themselves on the back about this legislation," he said in a statement. And offered an amendment to the transportation spending bill that would ban funding for the signs.
Democrats said the signs were absolutely fine. California Sen.Barbara Boxer said on the Senate floor that it didn't matter whether lawmakers voted for or against the stimulus plan, they should still fund efforts to tell people what it was doing.
...At stake: jobs for sign makers, jobs for others if the money were to be used differently, and control over how the stimulus package is perceived. Since the plan was enacted, Democrats and Republicans have fought over how fast the money is being spent, and whether it has delivered results.
The signs present risks to both parties, though. If voters decide the spending was a waste, the signs will remind them of the Democratic program. If the stimulus is ultimately seen as helping the economy, the signs remind voters that Republicans largely opposed it.
Let's not delude ourselves. It's all about how the stimulus package is perceived. I seriously doubt the senators cared a whit about jobs for sign makers when debating this proposal. But the proposal failed. The signs will stay. Which, if you take the writer's interpretation, suggests that the Democrats are more confident that people will see it their way.
As I indicate in the title of this post, over 70% of economists surveyed either "agree" or "strongly agree" that Wal-Mart "generates more benefits to society than costs". Only about 17% would make the same statement about casinos.
