On deck: FOMC meeting, leading indicators, home prices, home sales, durable goods, consumer sentiment.
The main event for the markets this week will be the Federal Reserve’s two-day policy meeting, beginning on Tuesday and concluding with the Fed’s always eagerly–awaited policy statement at 2:15 p.m. on Wednesday. Analysts expect the Fed to sound a bit more upbeat about the economic outlook compared to its August statement, when it said economic activity was “leveling out.” In fact, recently renominated Fed Chairman Ben Bernanke noted on Sept. 15 that the recession is “very likely over” at this point.
All this pretty much settles the question of whether the Fed will increase the size of its asset-purchase programs. Indeed, the markets are now looking for clues as to when policymakers will begin to slow their rate of such purchases in advance of ending the programs outright. With its purchase of $300 billion in Treasury securities almost complete, the Fed has already said it will slow its rate of buying Treasuries in order to avoid disruption to the markets. Planned Fed purchases of $1.45 trillion in mortgage-backed securities and federal agency debt are only about half-way completed. The markets will be looking for any change in the planned volume or timing of these purchases as a possible early sign of a shift in policy thinking.
However, an improving outlook doesn’t mean higher interest rates are any closer now than they were a month ago. Indeed, the bottom line from the Fed’s statement will most likely be that, amid concerns about the strength and sustainability of the recovery, the Fed will remain committed to keeping its target interest rate at “exceptionally low levels” and “for an extended period.”
Consistent with those concerns, the Fed’s Sept. 9 Beige Book report, a summary of economic conditions in each of the Fed’s 12 districts, characterized the outlook as “cautiously optimistic,” while noting decidedly mixed reviews on business activity. The report, prepared in advance of each policy meeting, said consumer spending remained sluggish, and while labor markets showed signs of improvement in some districts, hiring conditions were generally weak. Manufacturing looked stronger, and residential real estate showed improvement, but commercial real estate was weak. Also, demand for loans continued to sag, and credit conditions remained tight.
In general—a couple of hawkish-sounding policymakers notwithstanding—the potential inflationary consequences of current policy are very low on the Fed’s worry list right now. In fact, many private-sector economists believe the risk of deflation remains higher than the chances of inflation over the next year or so. Over the past year, the Fed’s preferred measure of core inflation, which excludes the ups and downs in energy prices, has slid from 2.7% to 1.4%, and history shows that in all recessions going back to the 1970s, core inflation has continued to fall for about two years after recessions have ended.
In an economy with as much slack, or unused labor and production capacity, as this one, the risk that core inflation could fall to zero, or below, is significant. That’s a risk the Fed will not be willing to take by prematurely hiking interest rates until the recovery is well established.
Here’s the weekly calendar, from Action Economics.
By James C. Cooper
Tags: ben bernanke, commercial real estate, economic activity, economists, Federal Reserve, home prices, home sales, interest rates
Websites worth visiting…
[...]here are some links to sites that we link to because we think they are worth visiting[...]……
Perfumes For Women…
…Having the right knowledge you can do quality work at many more things and make less mistakes while doing it……
Kamasz…
[...]here are some links to sites that we link to because we think they are worth visiting[...]…
Online Article……
[...]The information mentioned in the article are some of the best available [...]……
Awesome website…
[...]the time to read or visit the content or sites we have linked to below the[...]……
so, shopping around after a citation is…
important and may be absolutely necessary. car insurance is generally the last step before these drivers can reinstate their license and it is often the most dreaded. thankfully for them, car insurance usually does not turn out to be the worst…
Blogs you should be reading…
[...]Here is a Great Blog You Might Find Interesting that we Encourage You[...]……
Gems from the Internet…
[...] I’d tried out a number of blogs for fresh ideas and I did [...]…
call for soaking several handfuls of fresh…
rosemary in a large glass of white wine for several days, then sipping the wine to ease palpitations, strengthen weak hearts, and heal broken hearts. rosemary in capsules, or rosemary tincture in large doses, can raise blood pressure however, so i…
Websites you should visit…
[...]below you’ll find the link to some sites that we think you should visit[...]……
avg free download…
[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose avg free download[...]……
open office…
[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose open office[...]……
Recent Blogroll Additions……
[...]usually posts some very interesting stuff like this. If you’re new to this site[...]……
You should check this out…
[...] Wonderful story, reckoned we could combine a few unrelated data, nevertheless really worth taking a look, whoa did one learn about Mid East has got more problerms as well [...]……
contemporary rugs…
[...]here are some hyperlinks to web pages that we link to mainly because we feel they are worth visiting[...]…
Awesome website…
[...]the time to read or visit the content or sites we have linked to below the[...]……
Trackback for this post…
[...] Sites of interest we have a link to [...]…
Links…
[...]Sites of interest we have a link to[...]……
Superb website…
[...]always a big fan of linking to bloggers that I love but don’t get a lot of link love from[...]……
lot of time that companies outsource the…
job to firms that can handle it efficiently.3. data entrycompanies have to deal with a lot of data on a daily basis. without help from data entry agencies, they are bound to meet a disastrous pile of work. bpo firms that…
leads?here are a few tips on how…
to find short sale leads.think about this: thousands of people each hour (yes each hour) search the internet for help and information on short sales and foreclosures. why don’t you set up a system to deliver some useful information to them?…
Favorite website…
[...] yet deliberating with an actual distinct fashion that you persuaded exactly who [...]…
Superb webpage…
[...] very few websites that had been detailed below, from our viewpoint are without any doubt well worth reading [...]…
2011…
Your style is so unique compared to many other people. Thank you for publishing when you have the opportunity,Guess I will just make this bookmarked….