Dedicated to Deposits: Deals, Data, and Discussion

Fed Statement: Economic Slowdown, Low Rates to Continue

POSTED ON BY

Fed Statement: Economic Slowdown, Low Rates to Continue

The important change at today's FOMC meeting was the Fed's acknowledgment that the economic recovery is weakening. The first sentence of its FOMC statement made this point:

Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months.

Another important change was the announcement that they intend to reinvest maturing mortgage-backed securities in longer-term Treasury securities. As expected, 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.

The growing concern about the economic recovery didn't change how Thomas Hoenig's voted. He again voted against the rate policy. According to the FOMC statement:

he believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted and limits the Committee's ability to adjust policy when needed.

Hoenig also didn't agree with the reinvestments in longer-term securities. The lone dissent isn't having much effect.

After the Fed statement, Treasury yields fell to low levels not seen for more than a year. According to Bloomberg, "The 10-year note yield dropped below 2.75 percent for the first time since April 2009."

Until the economy returns to solid growth, I'm afraid savers will probably not see much relief from these record low interest rates.

Future FOMC Meetings

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. The final three FOMC meetings for 2010 are scheduled for September 21, November 2-3 and December 14.


Related Posts

Comments
25 comments.


Comment #2 by Anonymous posted on
Anonymous
How is it that the Fed is allowed to get away with this crap??

If a private entity were to do what they do, they would call it "insider trading" or "rigging the market".  How in the hell are they allowed to mess with the market by buying their own debt???

8
Comment #4 by Anonymous posted on
Anonymous
To Anonymous 1, 2, and 3...
 
WELL SAID!!!

8
Comment #5 by Anonymous posted on
Anonymous
U got it about right there @ 1 its an old 78 by now homes :)

for Crista sake! Of course theres no inflation per Uncle Ben, its how they keep rates at 0 and allow banks to get away with 1% on CD's, of course there's no inflation per the CPI, its how they justify their voodoo numbers to keep from paying any COLA to us low "entitlement" beggars.

Of course if your "paying" for anything the resembles a utility bill, medical bill, dental bill, insurance bill, food, gas, or anything else a "normal" person dealers with daily your well aware that there IS inflation. I would love to see my bills go to 0 due to this "deflation" hell I wouldn't need much money either than.

I see no way any of us lower/middle middle class type can continue to stay there, with no increases in COLA, no rate of return on savings and things continue to creep up we need.

I  saved, lived well below my means so I wouldn't have to take any welfare or food stamps or what ever, I never got a dime in unemployment comp in my life, cause I worked as a  bag boy at 15 and 16, went into the Army at 17.

So YO Kramer and Kudlow, why is it hard to understand why we lower class aren't spending squat.

19
Comment #6 by Anonymous posted on
Anonymous
its the reason I've quit even worrying about these "competitive" rates lol. Besides anything near looking at is always "local" which is NOT local to me. Here its 3 major banks and a CU, all of which are in the same ball park. As for CU being better, hell, the CU here is even less, 1.15 for a 12 month CD, one of the banks is 1.40

1
Comment #7 by whitey (anonymous) posted on
whitey
These interest rates are just killing savers. It's ridiculous. If the Fed policy of low rates is supposed to be doing so much for the economy, then why is there no hiring? Why is  unemployment hovering at 9.5%, and REAL unemployment at 16 %? Clearly, Fed policy regarding near zero rates is doing nothing to help. Perhaps the economists need to consider that if folke got a decent, safe return, they would be inclined to purchase more which would result in more sales, profits and ultimately hiring. As it is now, savers get nothing for their dollars which simply encourages us to keep those dollars even closer.Makes one wonder if the Fed isn't in cahoots with wall Street. If a guy can get nothing by saving will he not ultimately turn to the stock market in order to get some return? Then, the Street wins again.

5
Comment #11 by Anonymous posted on
Anonymous
An old 78 is a record. Its antiquated in todays world, same as the low rates that we are seeing.

3
Comment #13 by Jo (anonymous) posted on
Jo
::::holding up cup of early morning "Joe" to toast all:::::

Sorry, too early in the morning to be having a drink, were I a drinker to begin with.  :-P  This has become truly ad nauseum per the choices the Fed continues to make. They do not and will not benefit us ever.

We're good enough to pay taxes, but we're not good enough to see interest rates going up in order to enjoy watching our money grow. Welcome to serfdom.

3
Comment #14 by Anonymous posted on
Anonymous
Remarks realeased from the FOMC meeting of August 10, 2017...

"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."


2
Comment #15 by Anonymous posted on
Anonymous
@whitey post 7

they are in "cahoots" with wall street, as long as rates are low the market goes up, or so they think, due to their thinking that more people will get fed up and go into the market to find a better return, which makes more money for the Kudlows and Kramers, and makes it look like everything is just fine.

 

3
Comment #19 by Anonymous posted on
Anonymous
Well, #18 rhetorical, if you are not looking for higher interest rates on savings like the rest of us, why are you even following this site? By the way, your guess is WRONG.

4
Comment #25 by Snippy (anonymous) posted on
Snippy
Note to Ken-the-Banking-Deals-Guy: Be sure to see "Federal Reserve's Low Rate Policy Is A 'Dangerous Gamble,' Says Top Central Bank Official" by Shahien Nasripour over at the Huffington Post site
<www.huffingtonpost.com/2010/08/13/federal-reserve-pursuing_n_681540.html>. Not surprisingly, the top official in question is Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, and (according to the article) "the Fed's longest-serving policy maker."

[I wasn't sure where else to post this; sorry if this was not the best place.]

1