FOMC Preview: Commitment Issues

- "The main consideration facing the Federal Open Market Committee when it meets on September 21 is whether to commit to a program of Fed balance sheet expansion. Recent economic data have given the FOMC time to postpone a decision on additional quantitative easing measures."
- "Two other stimulus options on the table are modifying the wording of the funds rate guidance in the FOMC policy statement and lowering the 0.25% interest rate the Fed currently pays on bank reserves. We expect neither to be adopted."
- "One change we do expect in next week’s policy statement is a subtle upgrade in the FOMC’s characterization of domestic economic conditions. The complexion of the economic data over the past three weeks suggests that the recovery is no longer slowing but is proceeding at a new, more subdued, pace."
- "Not much new is expected next week, but we suspect further action is coming in the next quarter or two. Given the likelihood that unemployment will remain unacceptably high for the foreseeable future, more quantitative easing is looking more and more like an agenda item for the Fed, whether it actually works to stimulate job growth or not."

CreditSuisse US Economics Digest 20100914

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