With the Fed rate currently at 0.25%, chances are that today's FOMC meeting will not include any announcement of a rate cut (although there is speculation that the Fed could go to 0% at some point). Instead, the Fed is more likely to continue its regular meetings and make comments on the state of the economy — as well as try other actions to free up credit and get things moving.
One of the more interesting possibilities for today's Fed meeting will be the possibility of the purchase of long-term securities by the Federal Reserve. Mortgage News Daily reports on how purchase of securities might be discussed by the FOMC:
According to Michael Feroli, an economist at JPMorgan, the most
interesting aspect of the FOMC meeting will not be whether rates are
cut, but rather if the Fed will begin to consider purchasing long-term
securities.
Fed, the course for policy would be clear," Feroli wrote. "However,
there are perceived costs. One of these is the uncertainty as to how to
effectively conduct open market operations in longer-dated Treasuries."
Add to:
The rate isn't technically 0.25%, it's set to a target range of 0-0.25%, it's effectively been under 0.20% for the last few days according to the NY Fed. Still an interesting development though…
Posted by: jim | January 28th, 2009 7:36 am |
Well, if you want to get TECHNICAL about it
But you are right…the rate is set for "between" and the Fed seems content to let things be, insisting that it doesn't see any foreseeable change in the rate in the near future. Which means it will need other ways to remain relevant.
Posted by: Miranda Marquit | January 28th, 2009 8:09 am |
On my site, I wrote an article explaining what the fed is and how it works. If your readers are unclear of how it works, I would invite them to stop by.
Posted by: elementaryfinance | January 29th, 2009 7:29 am |