FOMC Monetary Policy Meeting And Bernanke's Press Conference
At 12:30PM EDT, the FOMC announced interest rate policy, holding the benchmark interest rate at the 0-0.25% rate. Operation Twist is to be extended to year-end. At 2:30PM EDT, Bernanke held a press conference. During his statement he noted some key themes:
- Fed will not buy European debt on top the slight amount already
- Compared situation with Japan, where rates cannot be reduced anymore, noting however that there are uncertainty and costs to the non-traditional tools and operations.
- Watching situation in Europe carefully, hoping for improvement but also preparing for fallout and monitoring US exposure to that front. Also consulting European financial leaders through the process.
- Access to credit has been tough
- Employment picture is not improving fast enough.
- As far as QE, it is still on the table, and Bernanke wants us to know he does not feel the Fed has lost ammunition, and is ready to do what is necessary if warranted.
- He also touched on other topics like the fiscal cliff and watching BoE's new lending program. The latest BoE minutes did reveal a closer vote for QE.
Risk-on has stalled after the policy announcement and press conference. An initial risk-off reaction was followed by a risk-on push that failed to follow through.
This was expected from the US now market will survive few more days before it will collapse.
