Looks like investors are happy to borrow at artificially low rates that deny the inflation we face, in order to buy inflation-hedging commodities.
Posted on 01/25/2012 11:19:57 AM PST by NormsRevenge
WASHINGTON (Reuters) - The Federal Reserve on Wednesday said it will likely not raise interest rates until at least late 2014, much later than it had said previously, as it nurses a still-sluggish economic recovery.
The Fed, after a two-day policy meeting, repeated its view that the economy faces "significant downside risks" but it offered little to suggest it was close to launching another round of bond-buying to prop up growth.
It did say, however, that it would maintain a "highly accommodative" monetary policy stance. Economic conditions "are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014," the central bank said in a statement.
Many investors had expected the Fed to push its expectations for the first rate hike into 2014, but few had thought it would be late in the year. .. the Fed had said rates were not likely to rise until mid-2013.
The central bank also appeared more sanguine on the inflation outlook, suggesting prices were now rising at a pace consistent with policymakers' goals. The statement also dropped a reference saying the Fed was monitoring inflation and inflation expectations.
U.S. government debt prices rose sharply after the announcement, pushing long-term interest rates lower, while the dollar fell against the euro. Stocks prices moved into positive territory.
Aside from the 2014 rate pledge, the Fed's statement hewed closely to its last policy pronouncement in mid-December.
It described the unemployment rate as still elevated and said it expects inflation to remain at levels consistent with stable prices. In a slight shift, it acknowledged signs that business investment has slowed.
"I think what they are seeing is that the rate of growth is not sufficient to bring down the unemployment rate," said Brian Dolan, chief strategist at FOREX.com in Bedminster, New Jersey.
(Excerpt) Read more at finance.yahoo.com ...
Who didn’t see this coming?
Can you imagine what it would do to the housing market if they raised rates at all? HAHAHAHAHAHA!
They are as likely to raise rates as I am to jump out of a fourth story window above a concrete parking lot full rotating knives coated in Tabasco sauce..
Can you imagine what it would do to the housing market if they raised rates at all? HAHAHAHAHAHA!
A healthy housing industry is a symptom of a strong economy; not a cause. Of course, you couldn't hammer that into a Keynesian's head with a nail.
I have been tracing it backwards, paused for a while at Woodrow Wilson, then realized that Thomas Jefferson and the other founding fathers warned us of these events, then described and executed the only way they knew how to solve it.
I'm pretty sure it is time to mash the reset button on the whole experiment.
I can’t use the name calling I would like to use right now or I would get in trouble. These people have ruined life for those who tried to save to buy anything over the years. With their inflation, and now with no interest rates to hedge inflation. But hey it benefits the bankers and the debtors so who cares about the financialy moral folks. Just keep the borrowing game going as long as they can.
Looks like investors are happy to borrow at artificially low rates that deny the inflation we face, in order to buy inflation-hedging commodities.
LOL
2500 or Bust, Baaaby!! Heck.. 3,000!!!
Sure, the Fed won’t raise rates...but the market will.
For what it’s worth, all it takes is a day like today every other month, and an otherwise steady market for the price to reach 2000 by year end.
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