Fed Debate Moves From Tapering to Extending Bond Buying
Recently, the talk of a reduction in government stimulus has been floating around given the economy’s improving condition. However, since the F.O.M.C. meeting last month, many more, including those who directly vote on bond policy, have voiced their opinion for continued market intervention. Now, it can be said with a fair amount of confidence that the Fed will not be reducing bond buybacks by the year’s end, rather they will continue to maintain their policy for a few more years to ensure that the withdrawal of economic assistance does not have too many negative side effects.
Experts expect a “full throttle” year, with the Fed breaking records in terms of the amount of assets it has. This is due to the fact that while the economy is improving, it has still failed to meet the goals designated by the Fed. For example, consumer prices rose 1.3 percent compared to last year, but that is still short of the 2 percent desired by the Fed. Also, the ever important unemployment number is still not optimal, and the Fed remains on guard for a potential spring slowdown of hiring. As for positive news, some are saying that the housing market is finally starting to become a positive lift for the economy, rather than a drag.