Previewing the FOMC Meeting
Posted at 12:45 p.m. on Dec. 10, 2012
The Federal Open Market Committee meets this week on December 11 and 12 to continue adjusting the Federal Reserve’s monetary policy efforts. Bill McBride looks at the major topics of discussion.
“My expectation is the FOMC will announce additional security purchases starting in January after the conclusion of Operation Twist… The key questions are: the size of the additional purchases (some FOMC members have argued for $45 billion per month), the composition and maturity of the assets (Treasuries and MBS), and how long the purchases will continue (along with QE3).”
“Currently the Fed has been including projections of when participants think the first rate increase will happen, and the FOMC statement includes the sentence: ‘[the FOMC] currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015′. The could be replaced with general rules based on the unemployment rate and inflation.”