Savings Experiment: Snow Removal
The Money Man Behind Rick Santorum: Who Is Foster S. Friess?
The Federal Reserve Open Market Committee (FOMC) issued its statement indicating again that interest rates will remain low for an extended period of time. Thomas Hoenig dissented against the FOMC statement and wants a much tighter monetary policy. He still remains the only voice against the statement but is said to favor a change in language, not an immediate rise in interest rates.
The FOMC mentioned continued economic improvement but indicated that it was a mixed picture with high unemployment and depressed housing. With unemployment expected to remain elevated for the foreseeable future and little inflationary pressure from the CPI thus far, it is in no rush to tighten.
The one missing element was the mention of discontinuing quantitative easing with the elimination of the remaining special program in June and the possibility of any future action. Shrinking the Fed balance sheet would be the next step. This may indicate that the Fed is leaving all options open, including additional monetary easing if necessary because of economic deterioration.
Monetary policy in general will be loose with the rates staying low for an extended period of time. There is no reason to take any chances with any hawkish language given the mixed economic news, uncertainty in Europe, and lack of any inflationary pressure.
Until the employment situation improves substantially or there is significant inflationary pressure, I do not expect any monetary tightening. The FOMC will most likely utilize speeches by Fed officials to telegraph any significant changes in monetary policy to minimize the chances of confusion and disruption in the market. This has been and will continue to be the pattern for the near future.
Doug Roberts is the Founder and Chief Investment Strategist for ChannelCapitalResearch.com, an independent research firm focusing on investment strategies using the Federal Reserve's impact on the stock prices.
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
