Federal Open Market Committee

Claire Jones

Our week ahead email helps you to track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

The Federal Open Market Committee meets on Tuesday to set monetary policy for the coming month and a half. The committee votes on Wednesday afternoon. Here’s the FT’s US economics editor Robin Harding on what to expect: Read more

Robin Harding

I have a piece in today’s paper previewing what promises to be a quiet Federal Open Market Committee meeting this month.

In particular, talk that the FOMC is now studying a programme of “sterilised” quantitative easing is, in my view, incorrect. I think the current FOMC discussion looks more like this: Read more

Claire Jones

Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

FOMC/ BoJ votes

The Federal Open Market Committee and the Bank of Japan’s policy board both vote on Tuesday. Will either panel back a change in course?  Read more

Claire Jones

Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

Bernanke testimony

Fed chairman Ben Bernanke is due to speak on the economic outlook and federal budget situation on Thursday. He’s up in front of the House Committee on the Budget at 10.00 local time (15.00 GMT) on Thursday. Read more

Claire Jones

Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

FOMC meeting

The highlight of next week’s calendar is Tuesday’s Federal Open Market Committee meeting.

Here’s the FT’s US economics editor Robin Harding on what to expect:  Read more

Claire Jones

From the FOMC statement:

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today to extend the average maturity of its holdings of securities. The Committee intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less. This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.  Read more

Gavyn Davies plans to comment after the FOMC meeting finishes.

Ben Bernanke 

Ben Bernanke. Image by Getty.

As the Fed starts its special two-day FOMC meeting today, economists are uniformly expecting a further easing in monetary policy, and markets have priced this in. It would be surprising if the Fed did not deliver. The FOMC will be mindful of the fact that US core inflation has risen in the past few months, but the majority still seems confident that this will prove temporary. Recession risks, on the other hand, would quickly return if the Fed allowed financial conditions to tighten. That will be uppermost in their minds at this meeting.

It is useful to analyse the Fed’s options by asking what it is basically trying to achieve at present. The minutes of the August FOMC meeting made it clear that the majority of members are trying to ease monetary conditions by reducing long bond yields, and thereby flattening the yield curve. The thinking is fairly straightforward. Since they cannot reduce short rates below zero, the next most obvious way of easing policy is to reduce long rates towards zero as well. That was also the purpose which lay behind QE2; the rise in the monetary base which occurred as they increased the size of their balance sheet was an incidental side effect of the policy, not its primary purpose. And it has got them into a lot of political trouble.

 Read more

Claire Jones

Our week ahead email will help you to track the most important events in the central banking world. To see all of our emails and alerts visit www.ft.com/nbe

Rate votes

The key event in next week’s calendar is the Federal Open Market Committee’s policy meeting, which Ben Bernanke announced at Jackson Hole would be a longer-than-usual two-day affair. Read more