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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: ggersh who wrote (31232)	10/22/2010 8:04:01 AM
From: DebtBomb	Read Replies (2) \| Respond to of 71479

Fedspeak: More Bond Buying ($100B a Month?) Ahead Published: Tuesday, 19 Oct 2010 \| 4:23 PM ET Text Size By: ReutersDiggBuzz FacebookTwitter More Share A string of U.S. Federal Reserve officials on Tuesday indicated the central bank will soon offer further monetary stimulus to the economy, with one saying $100 billion a month in bond buys may be appropriate. While some internal reticence to the unconventional policy was still evident, the consensus view at the Fed sees the economy as weak enough to warrant further support, most likely through increased purchases of Treasury debt. Source: frbatlanta.org Atlanta Federal Reserve President and CEO Dennis Lockhart -------------------------------------------------------------------------------- The U.S. economy is expected to have grown just 1.9 percent in the third quarter, a level considered too low to bring down unemployment. The debt purchases would help lower long-term interest rates in the hope of boosting demand. Atlanta Fed President Dennis Lockhart's willingness to cite a specific dollar figure for purchases, one largely in tandem with market expectations, was seen as another hint that planning is actively underway. "If we're going to pursue another round of quantitative easing, it has to be a large enough number to make a difference," Lockhart said in an interview on CNBC. "As a monthly number ($100 billion) is fairly consistent with what we did before, and so I think it would certainly be in the range of numbers one might consider ... but if you were talking about $100 billion as simply the overall program, I think that's too small," he said. (Read more about his comments here). Another Fed official, however, suggested another round of Treasury purchases may not have the desired effect because interest rates along the yield curve have tightened. "My own guess is that further uses of QE would have a more muted effect on Treasury(spreads)," because markets are functioning much better now than in early 2009, said Minneapolis Fed Bank President Narayana Kocherlakota (Read more about his comments here). Two especially dovish speeches, from the Chicago Fed's Charles Evans and New York Fed chief William Dudley, suggested some officials would like to consider explicitly raising the Fed's inflation target for a time, a controversial proposal. Stan Honda \| AFP \| Getty Images William C. Dudley, President and CEO of the Federal Reserve Bank of New York -------------------------------------------------------------------------------- Dudley said both inflation and employment are likely to remain below levels that are consistent with the Fed's mandate. "Viewed through the lens of the Federal Reserve's dual mandate -- the pursuit of the highest level of employment consistent with price stability, the current situation is wholly unsatisfactory," Dudley said, repeating an argument he made earlier this month. (Read more here). The reassurances about forthcoming stimulus were not enough to soothe U.S. stocks, which were down sharply on the day after an interest rate hike in China sparked concerns about the outlook for global growth. Losses were compounded after news of a legal action against Bank of America by the New York Fed and several investment institutions. In the meantime, moratoria on home mortgage foreclosures could hamper a recovery in the housing market and hurt economic growth overall, said Richard Fisher, President of the Dallas Federal Reserve Bank, told a meeting of the New York Association of Business Economists. "It prevents that market from clearing ... It's a retardant on growth so I hope that the authorities will clear this up as soon as possible," he said. cnbc.com