The Financial Times – Short View: Fed’s exit strategy
Nobody is expecting the Federal Reserve to change its target Fed funds interest rate on Wednesday. It will remain at 0.25 per cent after the federal open market committee meets. But there has been a flurry of speculation that the Fed will hint that the “exit strategy” from its loose monetary policy will come sooner than once thought. Last Friday’s payroll report for July, which showed joblessness rising slower than expected, egged this on.
Bloomberg.com – Fed May Recognize Faster Growth, Keep Rates ‘Exceptionally’ Low
Federal Reserve policy makers may today acknowledge economic growth will be faster than they anticipated, while committing to keep the benchmark interest- rate target near the lowest level on record. Central bankers gather in Washington as analysts project 2 percent growth or faster in the second half of 2009 — twice the pace the Fed forecast in June. At stake in today’s statement: delivering a message that the Fed will ensure the recovery is sustained, without stoking inflation expectations. The need to reinforce the recovery means policy makers will reiterate rates will be kept “exceptionally low” for an “extended period,” analysts said. At the same time, Chairman Ben S. Bernanke and his colleagues will likely consider ending their $300 billion Treasuries-purchase program, an emergency step taken in March to help pull down borrowing costs.