The Fed: Life After Zero

The Fed: Life After Zero - 1/28/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

The Fed: Life After Zero, With Rates About As Low As They Can Go, Fed Policymakers Won't Be Talking About More Cuts At Wednesday's Meeting. Here's What They Should Discuss Instead.
Chris Isidore

CNNMoney.com. January 28, 2009
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EXCERPT: The Federal Reserve wraps up its two-day meeting about what to do with interest rates Wednesday afternoon. But that's probably two more days than the central bank needed. With the Fed having already cut its key interest rate to near zero last month, there is little suspense about what the central bank's Federal Open Market Committee will announce. In fact, the Fed said in its statement last month that it would likely keep rates near zero "for some time" due to the weakness in the economy. Still, the rate-setting FOMC, which includes Fed governors and a selection of the presidents from the Fed's twelve district banks, is set to meet eight times this year. And while the Fed probably has more tricks up its sleeve to help the economy, don't expect them to be announced Wednesday. "I think the Fed always has bullets left, but as a practical matter, the FOMC can disband," quipped Sung Won Sohn, economics professor at Cal State University Channel Islands. "There's not a whole lot they can do right now. " Of course, the Fed has been unusually creative in the past year. It has established several new programs to pump more than $1 trillion into the economy in an effort to help spur the economy and get banks to start lending again. But most of these initiatives were approved by the Fed's Board of Governors, not the FOMC. And it's quite likely that even if the Fed comes up with new programs to try to help get credit flowing again, they also won't need the approval of the FOMC. What will the Fed be talking about? With that in mind, the Fed provided some hints last month about what to expect at future FOMC meetings.

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