Tracking The World Economy...-13/12/2010

The US Federal Reserve Is Prepared To Ease Its Policy Further

The US Federal Reserve FOMC meeting’s minutes on 21 September indicated that the Fed is prepared to ease monetary policy soon and focused on purchases of US Treasury securities as ways to add stimulus. The Fed also said for the first time that it was considering targeting a path for the level of nominal GDP as a way to increase price expectations.
Policymakers generally agreed that the incoming data indicated that output and employment were increasing only slowly and at rates well below those recorded earlier in the year. They saw data on business and household spending as mixed and said residential construction and home sales were very weak. Nevertheless, policymakers judged the economic recovery to be continuing and generally expected growth to pick up gradually next year. As it stands, the US economy slowed down to an annualised rate of 1.7% in the 2Q, from +3.7% in the 1Q and consensus expects the economy to expand by 1.9% in the 3Q.



Tracking The World Economy...-13/12/2010