Fed Statement

Jacob Goldstein reacts to today’s Fed Statement:

In ordinary times, a near-promise from the Fed to keep rates near zero for two years would be seen as a dramatic, radical policy.

But the Fed’s big moves over the past few years — particularly the two rounds of quantitative easing in which the Fed created trillions of dollars out of thin air, and used the money to buy bonds — make today’s announcement less surprising.

The Dow jumped about 5% on the announcement, reversing most of yesterday’s losses. Apparently the specificity with which the Fed made its promise to keep the Fed Funds at/near 0% is novel.  Krugman is puzzled at the market response, as this is not a new development, merely an extension of the current policy.  It also looks like something is going right on Italy.

These are crazy times.  I have no idea what is going on.

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About brianbergfeld
I am an economics PhD student at Washington University in St. Louis.

One Response to Fed Statement

  1. Pingback: QE3 and Yield Curves « Brian Bergfeld

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