Friday, September 14, 2012

The Fed Announces New Program To Keep Long Term Interest Rates Low

The Fed announced the decision of the FOMC to purchase mortgage securities and other assets to deal with the slow economic recovery in the US.  Only one of the 12 FOMC members voted against decision. The Fed remains concerned about high unemployment and a decline in median household income.  The Fed remains unconcerned about inflation; it is below its target rate of 2%

The response to the Fed decision has been mixed.  Republicans oppose any measures that might improve the economy before the election and some question the impact that the announcement might have on job growth.  The Fed believes that its policies have contributed to job growth.  The Fed has more information about the state of the economy than any other entity.  If it is concerned enough about the state of the economy to take actions which are unpopular with many on the right, we should also be concerned.

No comments:

Post a Comment