Markets Eager for Something – Anything – New from Fed
So much anticipation for a Federal Reserve Board statement not likely to be markedly different from any so far released in 2013.
The Federal Open Markets Committee, which sets most Fed monetary policy, is meeting Tuesday and Wednesday and will release a statement on their most recent forecasts and potential policy shifts early tomorrow afternoon, followed by a press conference with Fed Chairman Ben Bernanke. (Most analysts agree the real news will likely come during Bernanke’s Q&A with reporters.)
This is pretty much the FOMC’s monthly routine.
As has also been their monthly routine for the past six months or so, Bernanke and his colleagues will undoubtedly acknowledge some recent economic stumbling blocks – namely a leveling off of manufacturing activity in the first half of 2013 and the stubbornly high 7.5% unemployment rate.
In the same statement, however, the FOMC is widely expected to reaffirm its commitment to tapering its easy money stimulus programs, possibly as soon as September, depending on the broad trajectory of economic data between now and then.
Three rounds of bond buying programs, or quantitative easing, since the recent financial crisis have expanded the Fed’s balance sheet to more than $3.1 trillion in assets from less than $1 trillion in mid-2008, a concern to those who wonder what the impact will be when the Fed begins to unwind those assets.
The only difference between tomorrow’s message and those of the past six months is that we’re now getting closer to an actual announcement by the Fed that it will start gradually scaling back its $85 billion a month in bond purchases. That proximity seems to heighten investor anxiety.