Stephen Nefdt's List: forex news

Analysis: FOMC Pushes Off Day of Reckoning on Easy Money Pol 16:12 EDT / Aug 12




By Steven K. Beckner

Market News International - Although the Federal Reserve's
Wednesday policy statement upgraded its assessment of economic and
financial conditions, it otherwise gave no real indication that the
central bank is preparing to exit its easy money strategy anytime soon.

The only change the Fed's policymaking Federal Open Market
Committee made to its long-term securities purchase program was to slow
the pace at which it will buy Treasury securities so as to stretch out
what remains of the $300 billion authorized in the spring. The overall
amounts of Treasury, agency and agency-backed MBS were not changed.

After two days of meetings, the FOMC voted unanimously to leave the
federal funds rate in the zero to quarter percent range. And the Fed's
policy announcement once again said short-term rates are apt to remain
"exceptionally low ... for an extended period."

What's more, the Fed said it will carry to completion its
large-scale purchases of Treasury bonds and mortgage backed securities
-- a quantitative credit easing tactic aimed at holding down long-term
interest rates.

Explaining its decision, the Fed said, "Information received since
the Federal Open Market Committee met in June suggests that economic
activity is leveling out." And it said, "Conditions in financial markets
have improved further in recent weeks."

By contrast, the FOMC's June 24 statement had said, "Information
received since the Federal Open Market Committee met in April suggests
that the pace of economic contraction is slowing. Conditions in
financial markets have generally improved in recent months."

The two statements are otherwise very similar in the way they
portray remaining downside risks to the economy.

"Household spending has continued to show signs of stabilizing but
remains constrained by ongoing job losses, sluggish income growth, lower
housing wealth, and tight credit," Wednesday'