Frontrunning the FOMC: Blame it on Europe
pic credit: eyesseeeyes via Flickr
Extended period has gotten a second wind and Europe is going to get all the credit. Naturally.
Central bankers may reduce their 2010 estimates by “several tenths” of a percentage point and as much as 0.75 point for 2011, said former Fed Governor Lyle Gramley. That would mark a reversal from April, when officials raised their projections for this year to a range of 3.2 percent to 3.7 percent and left 2011 and 2012 forecasts little changed.
The new estimates are likely to reinforce the Fed’s pledge, in place since March 2009, that interest rates will stay very low for an “extended period,” said former Fed researcher John Ryding. Some Fed officials are concerned that results of stress tests planned for European banks may further shake confidence in the continent’s financial system.
“If you were a policy maker and you were looking at the U.S. picture, you’d say that the downside risks have increased relative to where you thought they were six weeks ago,” said Ryding, chief economist at RDQ Economics LLC in New York.
JDA is holding out until at least December of 2012, mostly because that coincides perfectly with Mayan doomsday predictions and is no less of a perfect science than deciding how easy the cheap money should be month after month.