Steady Stimulus Sparks Substantial Stability

I totally disagree with the title of this article but it sounds catchy. You’ll find info about the negative effects of QE3 by clicking this link.

Today’s FOMC statement was released by the Fed at 2:15pm and confirms the Fed will continue purchasing mortgage-backed securities until the labor market improves “substantially”.

Wednesday’s Press Release speaks clearly on this, “If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability.”

Concerning interest rates, the Federal Reserve said this: ” In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.”

This being the last meeting before the election, did not contain any surprises. There is no new policy but, as seen above, the Fed strongly confirmed their stance on interest rates and their quantitative easing program.

Household spending has increased at an exponential rate. Whether the information is a direct result of QE3, we will be able to observe that more precisely if the housing market continues to advance. We know QE3 is intended to directly affect the housing market. Chances are we are just seeing a data blip in data the month before the U.S. Presidential Elections.

Go ahead and leave your fundamental thoughts below. 🙂

If you haven’t seen Casey’s recent article on Forex Trading, don’t forget to check it out!

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