The Fed keeps rates low despite the recovery - April 29, 2010
The news has given a new heart from U.S. markets, battered by the crisis of European sovereign debt. The Fed decided to keep its key rate in the range of 0 to 0.25% during a "prolonged period". After two days of meetings of its Monetary Policy Committee (FOMC), in Washington, the decision was made Wednesday by nine votes against one. As at the previous meeting, Thomas Hoenig, president of broadcasting at the Fed in Kansas City, voted against this provision, hoping that the Fed abandons this language.
The Fed noted that, as at its previous meeting in mid-March that "employers remain reluctant to increase their payroll, and a number of barriers impede growth.Considering that the recovery should always be at a pace "moderate" for some time, the FOMC believes that the absence of threats of inflation, the conditions are in place to guarantee a rate "unusually low" long.
Despite this announcement, your wants more optimistic: "The economy has continued to strengthen" and "labor market begins to improve," the Fed wrote in its final communique. However, no information suggests the date of a rate hike to come.
For Thomas Hoenig, the language of the Fed is likely to "aggravate the financial imbalances."Like other FOMC members who themselves do not have a right to vote, he fears that the Fed can no longer control any increase in futures prices if it is slow to signal his intention to increase its rates.
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