Hidden in this article, I’m starting to feel a compelling need for Vaseline.
"Traders work the floor at the New York Stock Exchange. US Federal Reserve policymakers will aim to quell this week speculation about an early exit from their massive stimulus effort even with the economy showing more signs of recovery, analysts say."
The Federal Open Market Committee (FOMC), which opens a two-day meeting Tuesday, is unlikely to make any change to its near-zero interest rate policy or its efforts to flood the financial system with money to restore credit flows.
"I think they are very much concerned about the prospects for recovery," said Michael Gregory, economist at BMO Capital Markets.
"The tone of the Fed has been trying to counter the expectations building in the market" of moves toward a hike in rates or withdrawal of the stimulus described by some as "quantitative easing" to pump money into the financial system, Gregory said.
The federal funds rate has been in a record-low range of zero to 0.25 percent for the past year, and the central bank is in the midst of a program injecting more than a trillion dollars into the system, mainly through the purchase of various government and agency bonds.
Fed chairman Ben Bernanke last Monday went out of his way to quash the notion that the Fed was closer to rate hikes in view of better economic news, especially in the labor market.
"Though we have begun to see some improvement in economic activity, we still have some way to go before we can be assured that the recovery will be self-sustaining," Bernanke said in a speech.
Bernanke said the recovery faces "some formidable headwinds," particularly the weak jobs market and tight credit conditions… [emphasis added]
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Now I think I understand this, but if I get something wrong, would one of the economists or accountants who read here please correct me? If I understand correctly, the Fed gets the money for this stimulus to the Banksters through government borrowing. Currently the rate of a 91 day T-bill is 0.5%. If the Fed is lending to Banksters at 0.25%, we the taxpayers are picking it the tab for half the interest on the money they get. Now the biggest single reason that the jobs market isn’t picking up is that business people, especially small businesses can’t get the credit they need to do business. There should be plenty of money available for loans to them. So what are the banksters doping with all that cheap money from the Fed? Instead of lending it, which is their so-called reason to exist, they are investing it in the stock market for profit. Then they are making even more profit by raising the interest rates we pay for loans and credit cards for more profit. Then instead of loaning some of that profit, they are using it to pay themselves obscene bonuses. This is the thanks we get for bailing them out. Are you mad yet? If not, why?