Thursday, November 03, 2011

Bernanke Gives Push to Further Stimulus as Officials Lower Growth Outlook
Additional easing may occur by February and could coincide with possible actions by new European Central Bank President Mario Draghi to contain fallout from the continent’s sovereign- debt crisis, Soss said.
...
The vote for yesterday’s statement was 9-1. Chicago Fed President Charles Evans opposed the decision, the first dissent in favor of easier policy since Boston Fed President Eric Rosengren in December 2007. Evans favored “additional policy accommodation,” the Fed said without elaborating.
...
“They want to have that option in their back pocket, should the economy remain sluggish and should they fail to make progress with their objectives, especially unemployment,” said Roberto Perli, managing director for policy research at International Strategy & Investment Group in Washington. “They did Operation Twist recently, and they might want to assess whether that is working or not before expanding the balance sheet.”
...
“The FOMC is inclined toward a more accommodative policy,” said Ward McCarthy, chief financial economist at Jefferies & Co. in New York. “It seems very clear that is where Bernanke and other policy makers think policy is headed.” 
I would argue that instead of keeping options "in their back pocket" they need to be proactive and get ahead of the curve. They need to bolster the economy to make it more resilient against any possible shocks which could bring on deflation given the weak recovery.

No comments: