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Fed Extends Operation Twist; Press Conference 2:15

WASHINGTON (MarketWatch) — The following is the text of the Federal Open Market Committee statement released Wednesday:

“Information received since the Federal Open Market Committee met in April suggests that the economy has been expanding moderately this year. However, growth in employment has slowed in recent months, and the unemployment rate remains elevated. Business fixed investment has continued to advance. Household spending appears to be rising at a somewhat slower pace than earlier in the year. Despite some signs of improvement, the housing sector remains depressed. Inflation has declined, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee anticipates that inflation over the medium term will run at or below the rate that it judges most consistent with its dual mandate.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities. Specifically, the Committee intends to purchase Treasury securities with remaining maturities of 6 years to 30 years at the current pace and to sell or redeem an equal amount of Treasury securities with remaining maturities of approximately 3 years or less. This continuation of the maturity extension program should put downward pressure on longer-term interest rates and help to make broader financial conditions more accommodative. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee is prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed continuation of the maturity extension program.”

What will they do?

Chicago Tribune:

The assumption is that with so much worry about what the financial crisis in Europe might do to the global economy, plus recent data showing the U.S. economy softening, the Fed might deliver some tonic now to make investors feel better rather than waiting for an emergency.

AP:

The Federal Reserve is meeting this week at a time of high alert -- over the slumping U.S. economy, the aftermath of the Greek elections and the shaky financial markets. Whether that means it will announce any new action when its two-day meeting ends Wednesday isn't certain. But many analysts think the struggles of the U.S. economy and the threats from Europe will compel the Fed to say or unveil something to try to boost confidence.

Politico

Expectations aren’t high for Federal Reserve action as the central bank’s policymakers end their two-day meeting Wednesday. Several months of atrocious employment reports have the recovery wobbling but not to the point that would prompt massive intervention, economists say. It isn’t sufficient that job creation slipped precariously in May and consumer confidence followed suit this month. That, coupled with Fed Chairman Ben Bernanke’s hesitant testimony on the Hill earlier in the month has led to projections that they will — at best — take small steps to keep a flailing economy afloat.

Watch the markets dance: BigCharts.com



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hey check out Jick Rickards's interview on Fed's Op.Twist 2.0 on

today's Capital Account with Lauren Lyster on RT:

Jim Rickards on the latest Federal Reserve Rate Decision and Operation Twist 2.0

Published on Jun 20, 2012 by CapitalAccount

Follow us @
http://twitter.com/laurenlyster
http://twitter.com/coveringdelta

Welcome to Capital Account. Let's twist again...like we did last September. The Federal Reserve announced today that it will be extending operation twist -- it's effort to twit the yield curve and keep long-term interest rates low by selling short-dated securities and buying long-term treasuries. It's just more free market arm-twisting, and the Fed says it's willing to do more. Sounds like more threats!

And whales have been popular, but what about "operation humpback whale..." What is this? Well, how 'about the Fed buy both the long, as well as the short end of the curve, and sell a bunch of the bonds in the middle? We'll float that idea to our guest Jim Rickards, later in the show. He believes that the same force behind too-big-to-fail banks that is driving anti-competitive behavior on Wall Street is also responsible for driving monopolistic practices in government.

And last but not least, there is Loose Change, and a story you won't want to miss: Mickey Mouse spotted on Mercury! That's right, but what does this intergalactic phenomenon have to do with market trends? Demetri and Lauren will give you their two cents at the end of our show!

Predictions in due Time...
http://www.youtube.com/watch?v=zGDisyWkIBM

"Let it not be said that no one cared, that no one objected once it's realized that our liberties and wealth are in jeopardy." - Dr. Ronald Ernest Paul

The Federal Reserve has increased the money supply 9%

The Federal Reserve has increased the money supply 9% per year on average since 1913.

Federal Reserve Members have received a guaranteed 6% profit per year after expenses on their paid in Capital by Congress according the the Federal Act of 1913. (Bailouts?)

What cover story the Fed Chairman offers is either psychological manipulation (Keynesian Klaptrap) or mere misdirection (the pickpockets ploy) while the same old same old is repeated year after year after year...

Sound money rings true on it's own merits. It doesn't need psycho-babble to shore it up.

Free includes debt-free!

Ben's going to endorse Ron Paul for President.

He is also going to suggest everyone buy silver.

Ben's suggestion to buy

Ben's suggestion to buy silver will probably be symbolic when he initiates the end-game (destruction) of the US dollar through another round of inflation. Frankly, I'd be nearly in a state of shock if the chairman of the Federal Reserve intentionally raised rates or hinted at it in the future.