By TraderVox.com
Tradervox (Dublin) – According to the minutes released yesterday on the Fed’s meeting on March 13, the Fed is comfortable with the current growth and sees no need for further easing unless the economy loses in current momentum. The Fed has injected $2.3 trillion of bonds in two monetary easing operations conducted between December 2008 and June 2011. The third round of quantitative easing would be considered if the economic recovery currently being experienced changed or the prices rose slower than the 2 percent target set by the Fed.
In the minutes released yesterday, some Fed officials signaled that it third round of quantitative easing would be necessary if the current economic conditions were to deteriorate or if the prices were to go up. This is unlike previous standing where some official of the FOMC indicated that the current economic status warranted for quantitative easing. Some analysts are claiming that the March 13 minutes indicates a reduced urgency to add stimulus as there were no sentiments showing the need to add stimulus with the current state of the economy. The minutes also confirmed Fed’s decision to keep interest rates low until late 2014.
Dennis Lockhart, the Atlanta Fed President, said in an interview that he was contented with the current state of the economy and that he would have to see severe change in circumstances for him to endorse and third round of quantitative easing. Lockhart is a voting member of FOMC on monetary policy issues. After the release of the minutes, the market reacted sharply with the dollar rising against major peers in the market.
Higher gas prices effects have been diminished by the positive employment reports with a March 30 Commerce Department report indicating that Americans increased their spending by most in seven months. The report showed that purchases increased by 0.8 percent in the month of February. It seems that the positive data from the US has started to ease the strong stand by Fed and traders and analysts are waiting to see whether the monetary policy will be changed be for the expected time.
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