What I would give to be a fly on in the wall at the Federal Reserve right now, where Ben S. Bernanke is probably doing a double take on Friday’s horrible jobs report.
Dollars to doughnuts.CATHERINE RAMPELL
Dollars to doughnuts.
Ultimately members decided to pledge to keep short-term interest rates near zero until “at least mid-2013,” although there was clearly more appetite from some of the members for more easing. The committee even decided to stretch out its September meeting to allow more time for discussion of these issues.
Publicly Mr. Bernanke, the Fed chairman, has argued that government policy can and should play a significant role in helping the economy grow, but emphasized that Congress should be the ones to lead the way. Congress, however, is trying to tighten fiscal policy, which is the exact opposite of stimulus, and seems fairly entrenched in this view.
It will be interesting to see how this dismal jobs report, which didn’t even meet economists’ already very low expectations, affects the committee meeting. The Fed may not have much ammunition left, but perhaps this latest news will convince it to fire what bullets it has.
Many Wall Street economists, including those at Goldman Sachs and RBC Capital Markets, are now predicting that the Fed will announce a change in the composition of its balance sheet so that it holds more longer-term assets.
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