Unsurprisingly, The Fed To Continue Money Pumping

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At a Federal Open Market Committee on Wednesday, officials at the Federal Reserve said they would continue to pump money into the economy via an $85 billion bond-buying stimulus scheme, despite a stall in economic activity in recent months under the same policy.

Citing its statutory mandate, the Fed said that the continued stimulus is an effort to maintain price stability and encourage employment growth, the latter of which must improve substantially before the central bank will back off of its ongoing stimulus.

From an FOMC statement:

The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate.  Although strains in global financial markets have eased somewhat, the Committee continues to see downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.

As unemployment rates are expected to remain around 7.8 percent for the month of January, Fed officials say that they will hold interest rates near zero until unemployment is down to 6.5 percent. Central bankers say the only way the policy will change is if inflation climbs above 2.5 percent in coming months.

The Federal Reserve’s balance sheet is estimated to have expanded in excess of $3 trillion in recent years. Recent meeting minutes of the FOMC show signs of disagreement between members of the committee over how much longer the central bank can continue quantitative easing without major and obvious economic consequence.

Some economic experts say that Americans can expect soaring food and fuel prices as early as 2014 if the Fed policy doesn’t produce dramatic economic growth this year.

Sam Rolley

Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After covering community news and politics, Rolley took a position at Personal Liberty Media Group where could better hone his focus on his true passions: national politics and liberty issues. In his daily columns and reports, Rolley works to help readers understand which lies are perpetuated by the mainstream media and to stay on top of issues ignored by more conventional media outlets.

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