Stimulus – Jobs – The Fed

The Fed’s controversial stimulus program includes buying $85 billion in Treasuries and mortgage-backed securities each month, in an effort to lower long-term interest rates. It marks the third round of so-called quantitative easing, which is why it’s nicknamed QE3.

“About half” of the 19 Fed “participants” expect the economy will improve enough to warrant an end to QE3 later this year.

But only 12 Fed officials get to vote on monetary policy at each meeting, and of those key “members,” “many” said they need to see further improvement in the job market before they’d be willing to start gradually winding down the stimulus program.

“Many members indicated that further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of asset purchases.”

The Fed has also been holding short-term interest rates near zero since December 2008, and has plainly stated that, regardless of what happens with QE3, it plans to keep short-term rates near historic lows until 2015.

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Posted on July 10, 2013, in Politics, Socioeconomics. Bookmark the permalink. Leave a comment.

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