NYT: Expect Patience from the Fed. And Maybe Some Barry White.
Update: reader SM informs JDA that Astroglide may actually be the lube of choice here. Thanks, SM, I'll keep that in mind when Zimbabwe Ben texts me next time.
Read: Even though your financial ass is already worn dry, the Fed will continue their slow and calculated writhing on your savings and faith in our financial system. With a little slap on the taxpayer ass every now and then just to keep you interested.
U.S. Federal Reserve policy makers will meet this week amid stronger confidence that the recession has come to an end.
But that doesn’t mean rate increases are imminent. At the conclusion of their two-day meeting, set to start Tuesday, the Federal Open Market Committee is expected to hold rates at a record-low near zero. The policy panel is also expected to acknowledge the more steady drumbeat of hopeful economic news that has emerged since their last meeting.
At their August meeting, Fed officials also kept the target federal-funds rate for interbank lending at its current range of zero to 0.25% and noted in their policy statement that “economic activity is leveling out.”
Since then, the housing market has shown signs of improvement. Housing starts, for instance, rose to their highest level in nine months during August, climbing 1.5% to a seasonally-adjusted annual rate of 598,000. Meanwhile, retail sales exceeded expectations and climbed 2.7%, indicating that consumers might be ready to start spending again.
Also, industrial production — a key indicator when determining business cycle turning points — rose 0.8% in August compared with July.
Furthermore, many economists are growing more confident that the economy will post growth in the second half of this year.
Still, as Federal Reserve Chairman Ben Bernanke highlighted during his appearance at the Brookings Institution in Washington last week, there are significant challenges ahead. The economy is unlikely to grow enough in 2010 to make way for rapid labor market recovery, analysts said. In fact, as the effects of fiscal stimulus programs fade next year, some economists expect economic activity to slow down again in the first half of 2010.
With this scenario as a risk, the Fed has no reason to rush to rate increases, Fed watchers say.
Bend over, bitches, this next part is going to hurt.