4 ms·

"perpetual QE" It's hard to cast 2007 to date as perpetual and the end goal is not to keep interest rates down, but inflation.

001sky 14y ago
fed has said this will policy position will go forward for the 'forseable future' or some-such In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015. http://www.federalreserve.gov/newsevents/press/monetary/20120913a.htm http://www.federalreserve.gov/newsevents/press/monetary/2012...
- aptwebapps 14y ago
  Yes, by which point they hope that they won't need to keep interest rates down. In fact, this statement and others made at the time are an attempt to get additional traction with expectations about future interest rates.
  - 001sky 14y ago
    they hope... -- nuff said.
    - aptwebapps 14y ago
      Sorry, that just seems like a throwaway comment. They have to get traction somehow. Because of the inability to lower short terms rates any further, QE was introduced. As that failed to have enough of an affect they decided to assure the market that that they won't revert to business as usual at the first sign that things are springing back. Setting this expectation is necessary for them to get any traction with the market. Of course, if you think the slow recovery we're experiencing is going to falter or halt, then they might well be pursuing such policies for a long time. If it comes to that politics is likely to intervene in a large way.
      - 001sky 14y ago
        Its not a throwaway comment because you're confusing analysis with non analysis. 2007-2012 = 5 years 2007-2015 = 8 years It goes without saying that these are not equal. or equivalent. etc. If you google "fed" and "forseable future" you will get a variety of reports discussing the recent movements and QE decisions from 9/12 (at various levels of sohistication). So to sum, the notion of "perpetual" (or: open-ended) QE is closer to realtity than what you suggest (the finite 5 years of QE, etc). [1] TLDR: we are in a period of "open-ended" QE edits: clarity __________ [1] The fed hasn't gone further explicitly because "further" is not "foreseeable" with any credibility. Policy parameters = f('hope') is not what they get paid for, or why they are entrusted with power. etc.
        aptwebapps 14y ago
        I still want to nitpick on 'perpetual'. Not in any conceivable usage, but in the context of that post. "Few seem to want to hear it, but the housing 'recovery' is based strictly on a Fed that provides perpetual QE to hold down interest rates forever. ..." That's a much stronger statement than saying it's open-ended. Maybe I should have let it slide as a little hyperbole, however I disagree with overall thrust of the comment. Plus, the Fed's current policy is only open-ended in the sense that the recovery is not guaranteed because nothing is guaranteed. On our current trajectory it's not looking too bad. A lot slower than we'd like, but there is progress. I do not think it is unreasonable to expect the recovery to be complete to the Fed's satisfaction (with respect to their QE promise) in three or four years. (I'm not saying we'll have unemployment, for example, where it was in 2007 anytime that soon). If you add on a further period of QE to let them meet the commitment they have made, then I grant that is a long time but it is not forever. "Policy parameters = f('hope') is not what they get paid for, or why they are entrusted with power. " I was being a little flowery with 'hope', is all. They do have to act on what they believe are the facts and what they believe will happen, whether or not I call it 'hope'. However, what the Fed is supposed to do is look after inflation and unemployment. They've been very assiduous about the former while neglecting the latter for some time now and are finally allowing the idea that inflation could go a little higher than 2%.

001sky 14y ago

fed has said this will policy position will go forward for the 'forseable future' or some-such In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015. http://www.federalreserve.gov/newsevents/press/monetary/20120913a.htm http://www.federalreserve.gov/newsevents/press/monetary/2012...

aptwebapps 14y ago
Yes, by which point they hope that they won't need to keep interest rates down. In fact, this statement and others made at the time are an attempt to get additional traction with expectations about future interest rates.
- 001sky 14y ago
  they hope... -- nuff said.
  - aptwebapps 14y ago
    Sorry, that just seems like a throwaway comment. They have to get traction somehow. Because of the inability to lower short terms rates any further, QE was introduced. As that failed to have enough of an affect they decided to assure the market that that they won't revert to business as usual at the first sign that things are springing back. Setting this expectation is necessary for them to get any traction with the market. Of course, if you think the slow recovery we're experiencing is going to falter or halt, then they might well be pursuing such policies for a long time. If it comes to that politics is likely to intervene in a large way.
    - 001sky 14y ago
      Its not a throwaway comment because you're confusing analysis with non analysis. 2007-2012 = 5 years 2007-2015 = 8 years It goes without saying that these are not equal. or equivalent. etc. If you google "fed" and "forseable future" you will get a variety of reports discussing the recent movements and QE decisions from 9/12 (at various levels of sohistication). So to sum, the notion of "perpetual" (or: open-ended) QE is closer to realtity than what you suggest (the finite 5 years of QE, etc). [1] TLDR: we are in a period of "open-ended" QE edits: clarity __________ [1] The fed hasn't gone further explicitly because "further" is not "foreseeable" with any credibility. Policy parameters = f('hope') is not what they get paid for, or why they are entrusted with power. etc.
      - aptwebapps 14y ago
        I still want to nitpick on 'perpetual'. Not in any conceivable usage, but in the context of that post. "Few seem to want to hear it, but the housing 'recovery' is based strictly on a Fed that provides perpetual QE to hold down interest rates forever. ..." That's a much stronger statement than saying it's open-ended. Maybe I should have let it slide as a little hyperbole, however I disagree with overall thrust of the comment. Plus, the Fed's current policy is only open-ended in the sense that the recovery is not guaranteed because nothing is guaranteed. On our current trajectory it's not looking too bad. A lot slower than we'd like, but there is progress. I do not think it is unreasonable to expect the recovery to be complete to the Fed's satisfaction (with respect to their QE promise) in three or four years. (I'm not saying we'll have unemployment, for example, where it was in 2007 anytime that soon). If you add on a further period of QE to let them meet the commitment they have made, then I grant that is a long time but it is not forever. "Policy parameters = f('hope') is not what they get paid for, or why they are entrusted with power. " I was being a little flowery with 'hope', is all. They do have to act on what they believe are the facts and what they believe will happen, whether or not I call it 'hope'. However, what the Fed is supposed to do is look after inflation and unemployment. They've been very assiduous about the former while neglecting the latter for some time now and are finally allowing the idea that inflation could go a little higher than 2%.