In its rate decision today, the Federal Reserve held interest rates as expected, but announced it would reinvest in mortgage-backed securities, or, as Phil Flynn predicted in his energy report this morning, “the fearful Fed may just pump that cash back out there and buy more MBS or bonds to try to inspire some economic activity and maybe even some job creation.”
No surprise here: in its meeting today, the Federal Open Market Committee held the Fed funds rate at 0 to 0.25%. The Fed also said the pace of economic recovery is likely to only be moderate for the time being, citing weakness in employment, depressed housing numbers and sinking growth abroad. “Financial conditions have become less supportive of economic growth on balance,” the statement said.
Federal Reserve Chairman Ben Bernanke offered a mixed outlook for the economy in a speech today before the House Committee on the Budget. He said that although economic recovery has continued at a moderate pace, “significant restraints on the pace of the recovery remain.” Those restraints include continued strains on the housing market and cuts in employment and construction due to pressures on state and local budgets. Although he noted the slight uptick in employment in May, Bernanke said “a significant amount of time will be required” to restore jobs back to pre-2008 levels. (more…)
There was a rosy picture painted for the U.S. dollar, earnings and the economy at large at Dow Jones Indexes‘ 2010 Global Economic Outlook today. Analysts predicted a rebound in global economic activity. Kevin Logan, an independent global economist, said by the middle of this year, estimates for global GDP growth in 2010 are likely to be double what they were in the middle of 2009. Analysts said that the dollar would start out the year weak, with a recovery sometime in mid-2010.
