After the September meeting when Ben Bernanke dropped a bombshell on the markets by simply stating QE would be a policy until they were satisfied with growth and lower unemployment, we did not expect to hear much different language at this latest meeting.
Sure enough, they reiterated their concern about slowing growth and a persistent employment problem, also mentioning the availability of tools to combat the abnormal condition. The jury is out of course on the efficacy of such a plan, and clearly the merits of creating more dollars may have exhausted.
The Fed talked about frustration with the policies (or lack thereof) managed by lawmakers, referring again to fiscal cliff the country will face at the end of 2012. Pool the policies of monetary and fiscal legions and you can solve the problems of debt, growth and unemployment, says Chairman Ben Bernanke. Monetary policy is not a panacea (Bernanke’s words), and while it may provide a boost it won’t be the ultimate solution. During this earnings season, CEOs are voicing worry and concern over real economic issues – will this opportunity be wasted and draw our country into back into a recession – or worse. Troubles will not go away overnight of course but a plan of action would be a great start.
The Fed will continue to step on the gas supporting the economy with everything they have. After all, this is the Fed’s game; they control the pieces and the game board. While the data will be watched closely into the end of the year, do not expect much of a change in monetary policy, but in December we may see a forecast change as they tweak numbers for 2013.
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