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Unsurprisingly, The Fed To Continue Money Pumping

January 31, 2013 by  

Unsurprisingly, The Fed To Continue Money Pumping
PHOTOS.COM

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

Staff writer Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After learning about many of the biases present in most modern newsrooms, Rolley became determined to find a position in journalism that would allow him to combat the unsavory image that the news industry has gained. He is dedicated to seeking the truth and exposing the lies disseminated by the mainstream media at the behest of their corporate masters, special interest groups and information gatekeepers.

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