Articles

Fed Move on Debt Signals Concern About Economy, NYT

“We’re in a lousy middle between the economy picking up on its own and falling off a cliff,” said Cathy E. Minehan, a former president of the Federal Reserve Bank of Boston. “And that makes policy-setting really hard.”

WASHINGTON — Federal Reserve officials, acknowledging that their confidence in the recovery had dimmed, moved again on Tuesday to keep interest rates low and encourage economic growth. They also signaled that more aggressive measures could follow if the job market and other indicators continued to weaken. With short-term interest rates already close to zero, the Fed’s policy makers have relatively few tools available to encourage consumer and corporate spending. So they now plan to use the proceeds from the Fed’s huge mortgage-bond portfolio to buy long-term government debt. That action may put downward pressure on long-term interest rates and stimulate borrowing. For consumers, it means mortgage rates are likely to remain at record lows for some time.
By Sewell Chan, August 10, 2010, NYT

Link to article