FOMC Statement Preview

September 21st, 2010 by Belisarius

I would say that the market (equity especial) is pricing further QE measures being announced today.

Since there was some reservation and conflicting views during the last FOMC meeting on the reinvestment of agency and MBS debt and economic data is not deteriorating as fast as in anticipation of previous meeting, the odds that FED will introduce additional QE today are slim, in my view

What will they do? I suspect they will recognize weaker economic outlook and give some sort hint that if the detoriation continues that  the FED is ready to introduce additional QE.

Will that be enough to sustain this markets? In my view markets are expecting more…

This entry was posted on Tuesday, September 21st, 2010 at 11:01 am and is filed under Markets. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

2 Responses to “FOMC Statement Preview”

  1. Kova Says:
    September 21st, 2010 at 11:47 am

    And if (or better to say, when) the FED introduces QE 2.0 what is your opinion on:

    – how will the economy react?

    – how will the market react?

  2. Belisarius Says:
    September 21st, 2010 at 12:06 pm

    Because of lower interest rates now, addition $1 trillion will bring 0.5% of GDP growth. So a $1.75 trillion (approximate size of the original QE) would bring 0.875% to the GDP. Probably not sufficient to even bring the economy out of the recession relapse.
    Markets…same as with Japan, initial euphoria followed with correction.

 
Get Adobe Flash player