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Same Statement from the FOMC: Exceptionally Low Rates for Extended Period

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The third FOMC policy meeting of 2010 ended this afternoon, and the press release looks very similar to March's press release. The Fed continues to say the same thing about keeping the federal funds rate exceptionally low for an extended period:

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

Thomas Hoenig again voted against this policy, but all other members voted for it. There had been speculation that another member could decide to vote with Hoenig which would suggest a policy change within one or two meetings. Since Hoenig remained the lone dissenter, this would suggest it's going to take some time before the Fed changes its "exceptionally low/extended period" language.

Another thing that suggests that we are not going to see a policy change for a while is that there wasn't much change in the Fed's description of the economic recovery. Some of the comments on the economy were slightly more positive, but the Fed continues to say that housing starts "remain at a depressed level" and that companies "remain reluctant" to add to payrolls.

If you want an idea about what the market thinks regarding when the Fed will start hiking rates, check out this CME Group FedWatch tool. It shows you the probability of rate hikes in the future FOMC meetings based on the 30-Day Fed Funds futures prices. As you might expect, it has a zero percent chance of a rate hike for the next meeting in June. The next three FOMC meetings are scheduled for June 22-23, August 10 and September 21.



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Comments
8 Comments.
Comment #1 by Hoody (anonymous) posted on
Hoody
So what else is new!,

**** uncle Ben and the rest of em. Its all about the market and stocks and to keep the banks "full", so forget getting anything "competitive" on your savings for an "extended period", smirks!

 

Its all a plan to make you (savers) spend it all as fast as you can. While the banks get your tax dollars for free and go buy tresuries at 3% while if you even do get a loan they hit you with 8 to 10 % and CC at 30%.

 

I'm gona wait em out, and hold on to my $$.

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Comment #3 by Anonymous posted on
Anonymous
Saved all my life.  Bought only what I could afford.  Now I'm retired and I expected to supplement my income with the interest off my savings and I'm getting 2%.  As a result, I am drawing down the principal and eventually I will be in trouble.   Thanks alot Fed!   

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Comment #4 by Shorebreak (anonymous) posted on
Shorebreak
I didn't expect anything different from Bernanke and his minions. This low rate environment will continue regardless what the economy does because Bernanke and his Goldman Sachs buddies are reaping billions of dollars under this policy. Don't expect any change for the forseeable future.

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Comment #6 by Anonymous posted on
Anonymous
I say it's time to boot out all of the incumbents this Nov.  Everyone of the ****s.

4
Comment #7 by Anonymous posted on
Anonymous
Isn't it interesting to see all of the financial articles telling people to get back into the stock market now before it's too late.  Now they tell us this after the boys (I mean the crooks) in Wall Street have driven up the stock market so high with the help of all of the free money they received from the feds.  And of course, now the government wants us to buy real estate with the tax credit incentives at elevated prices supported by the banks not releasing their inventory of properties that had defaulted.  I am sick and tired of the crookednesss of Wall Street and the feds.

3
Comment #8 by Anonymous posted on
Anonymous
This is frustrating! Like others, I have saved and saved when so many people were out spending money they didn't have to buy things they didn't need and could, ultimately, not afford.  I, too, rely on the income generated from interest on my savings (after having been burned badly by the stock market and leaving it completely back in 2001-2002).  I want my HARD EARNED money kept SAFE and SECURE, but I also don't want inflation to eat it up, so the interest is VERY important.  Alas, it looks like I am stuck with bad rates for a while. Fortunately, I have consistently put my money into longer-term CDs, with the personal philosophy of "put it in at the HIGHEST rate available, regardless of term." That has set me up nicely, with an average of 4.9% on my money, but now, whenever a CD matures, I am only able to find around 3.6% for FIVE or SEVEN years.  UGH!  I hate to lock money in for that long since my threshold has been dropping...  first I said "nothing below 5.5%" then 5% then 4.5% then 4%.  Now, I just can't stand to put anything in for less than 4%, but I have already started to do that.  Sorry about the long post here, but I thought others might be able to relate!

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Comment #10 by Anonymous posted on
Anonymous
We live on our Social Security and interest from our savings.  We used to pump a lot of money back into the economy through trips and discrestionary spending, now we do not.  I refuse to invest in the stock market and I will not be forced too.  We'll just quit spending.  Great job, politicians!  Let's fire every one of them.

4
Comment #11 by Anonymous posted on
Anonymous
I'm curious what kind of person relies on the yield of his savings in retirement, yet isn't in long-dated treasures -- or even long-term CDs, for that matter.

 
I don't like the low rates either, but it seems that some people are complaining about their investment choices rather than the rates themselves.

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