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FOMC Statement: "Exceptionally" And "Extended", Liquidity Swap Arrangements Coming To An End On February 1, 2010
Release Date: December 16, 2009
For immediate release
Information received since the Federal Open Market Committee met in
November suggests that economic activity has continued to pick up and
that the deterioration in the labor market is abating. The housing
sector has shown some signs of improvement over recent months.
Household spending appears to be expanding at a moderate rate, though
it remains constrained by a weak labor market, modest income growth,
lower housing wealth, and tight credit. Businesses are still cutting
back on fixed investment, though at a slower pace, and remain reluctant
to add to payrolls; they continue to make progress in bringing
inventory stocks into better alignment with sales. Financial market
conditions have become more supportive of economic growth. Although
economic activity is likely to remain weak for a time, the Committee
anticipates that policy actions to stabilize financial markets and
institutions, fiscal and monetary stimulus, and market forces will
contribute to a strengthening of economic growth and a gradual return
to higher levels of resource utilization in a context of price
stability.
With substantial resource slack likely to continue to
dampen cost pressures and with longer-term inflation expectations
stable, the Committee expects that inflation will remain subdued for
some time.
The Committee will maintain the target range for
the federal funds rate at 0 to 1/4 percent and continues to anticipate
that economic conditions, including low rates of resource utilization,
subdued inflation trends, and stable inflation expectations, are likely
to warrant exceptionally low levels of the federal funds rate for an
extended period. To provide support to mortgage lending and housing
markets and to improve overall conditions in private credit markets,
the Federal Reserve is in the process of purchasing $1.25 trillion of
agency mortgage-backed securities and about $175 billion of agency
debt. In order to promote a smooth transition in markets, the Committee
is gradually slowing the pace of these purchases, and it anticipates
that these transactions will be executed by the end of the first
quarter of 2010. The Committee will continue to evaluate the timing and
overall amounts of its purchases of securities in light of the evolving
economic outlook and conditions in financial markets.
In light of ongoing improvements in the functioning
of financial markets, the Committee and the Board of Governors
anticipate that most of the Federal Reserve’s special liquidity
facilities will expire on February 1, 2010, consistent with the Federal
Reserve’s announcement of June 25, 2009. These facilities include the
Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity
Facility, the Commercial Paper Funding Facility, the Primary Dealer
Credit Facility, and the Term Securities Lending Facility. The Federal
Reserve will also be working with its central bank counterparties to
close its temporary liquidity swap arrangements by February 1. The
Federal Reserve expects that amounts provided under the Term Auction
Facility will continue to be scaled back in early 2010. The anticipated
expiration dates for the Term Asset-Backed Securities Loan Facility
remain set at June 30, 2010, for loans backed by new-issue commercial
mortgage-backed securities and March 31, 2010, for loans backed by all
other types of collateral. The Federal Reserve is prepared to modify
these plans if necessary to support financial stability and economic
growth.
Voting for the FOMC monetary policy action were: Ben S. Bernanke,
Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles
L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel
K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
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And here I thought there was a chance of them raising rates, and sending all their banking buddies straight to Hades...
What a shocker!
No way they raise rates, however, I just got off the phone with my broker and was told that the brokerage-now-bank will not be participating in the backstop of their institutional treasury money market fund as of December 31, 2009.
This seems like a major detachment of training wheels. Is that why the 1 and 3 month are 0, because of the influx of money moving from un-backstopped money markets to treasuries themselves?
To quote Steve Liesman: "Attention Shoppers, the Fed Store is closing in 15 minutes..."
E.g., no more free money for the squids. They'll have to earn it the ol' fashioned way (frontrunning retail E-Trade customers)
Liquidity Games Coming to An End? Fat flippin' chance. Switching to stealth mode.
Doesn't it strike you as funny that the Fed "anticipates" pulling back on a lot of stuff... but you just get the uneasy feeling they won't?
The new back door is through the IRS. Just when you thought it was safe to go outside, they figure out a way to make it rain again.
It was legal and fraudulent before it was illegal and fraudulent before it was legal and fraudulent.
Oh... you're just saying that to confuse the masses.
This is exactly what all of Bernanke's responses were to Sen. Bunning's written interrogatories. "Things changed...Lehman was OK until it wasn't...."
Yup, Bernanke's confirmation is basically a done deal. Gold will go up 50 bucks tomorrow as the dollar tankage continues.
Is Bob Pisani a proud American? Whenever the dollar shoots up, he keeps saying that the Dollar isnt behaving. Who cares if the markets go up or not. I thought as Americans, a strong dollar is what we want.
no nation ever achieved prosperity based on a weak currency.
When have our leaders ever used anything remotely like facts or history when it comes to policy? It's all about hope! Like when I slip and fall, I hope gravity fails and doesn't punish me for being stupid or clumsy. Just because something has never worked in recorded human history despite countless attempts around the earth at different times does not mean it will always be that way...oh wait it totally does!
"no nation ever achieved prosperity based on a weak currency."
China appears to be a counterexample.
China is prosperous?
One must look at the long term. It is possible to get a short term boost out of money printing but the long term effects are always harmful.
Also while the renminbi is pegged it's widely believed that if allowed to float the currency would be worth much more. It's basically a strong currency masquerading as a weak one. Also of note is that the more the currency gets weaker the unhappier the Chinese will become, the gov plays a dangerous game with the populace. I'm perosnally in the camp to bleive that when the dollar really starts diving that the Chinese gov will abandone the peg, which is greatly helping out Americans right now.
I bought some FXP today, just so you know...
you sound like Larry Kudlow
TLT selling off, looks like rates going to 4.s by New year.
IYR going to infinity.
Treasury market vs. dumb $ market, I wonder who is right...
Fed mood music : http://www.youtube.com/watch?v=XTjG8E1utyA
"Everything is awesome! But we are still keeping rates at 0% for the indefinite future...because you know things are awesome...but maybe they would not be awesome without 0% rates...Quick look behind you it's a unicorn!"
Awesome is the new normal until Amazing is the new awesome.
I guess for the past year, there's no need for Fed meetings because the same shit comes out after hours and hours of deliberations. They obviously have run out of ammo and are just waiting/hoping that things turn around.
Nah I'm sure they must be rolling out the idea of negative rates. Sure Zimbabwe Ben would love to lend at an offcial -5% rate instead of just a negative implied rate. So when you see offcial negative rates then they are out of ammo, and have kicked the dollar raping into a whole new level. Damn I wish I could pony up to the discount window!
While we are on the subject of the FED - watch a true American standing up to the MSM. And also see some marketing genius. http://www.youtube.com/watch?v=FNmi-bBhWG8
We are shit scared of raising interest rates because then more debt would go into default and the government will not be able to borrow so cheaply, their interest costs will go up. We will keep our ZIRP rates until the valuations on housing, CRE and other assets have come back to their pre-2007 levels allowing them to start re-inflating the debt ponzi again, then we will raise it to 0.25%.
We will keep our ZIRP rates until the valuations on housing, CRE and other assets have come back to their pre-2007 levels...
Well, that's certainly the plan - hold the bilge and pray that a miracle recovery (fundamentals be damned) happens, bringing values back from "fantasy" to something resembling reality, and then sell the radioactive crap back into the growing market.
Plan B? Well, there really isn't one now, is there.
+1
I put on my shorts for nothing??
"the machine" starts at 3 pm
Let's play fill in the blank!
___________ are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
Hey, it worked for the Japs, didn't it?
Ho Hum
The plan is perfect:
Ben says all is going according to plan and free money can end in Feb.
However:
Beginning with the release of data for January 2010 on February 5, 2010, the U.S. Bureau of Labor Statistics (BLS) plans to implement several changes to the content and format of the Employment Situation news release. Changes will be reflected in both the text and tables.
This will produce shitty numbers and following a January market sell-off/dollar rally, the Fed will just open the pipe again (not that they will ever really close it) and we'll be off to the moon.
If they don't come up with a reason to continue them before Feb they'll certainly reinstate them once the real state of the economy is revealed. It could turn into a very good Gold buying opportunity as you'd think it will correct when they end all those liquidity programs.
Link to your source: http://www.bls.gov/bls/upcoming_empsit_changes.htm
What will Professor Bernanke cook up Feb 2?
Remember when the US let Hussein commit all sorts of evil *until* he started selling oil in euro instead of dollars? Oh boy, we were up his ass in a hot minute. Well, Mission Accomplished: Arab petro powers are moving to displace the dollar itself with their own currency to price oil.
Blame it on Time's Man Of The Year.
The timing of these Fed moves in Feb are completely connected to the election cycle. Fed pulls back on the liquidity programs; the "economy" (i.e. stock market and phony gubmint statistics) "goes to sh*t" resulting in the perfect time to cram through stimulus 2 and still have time for it's phony "benefits" and GDP "growth" to show in Q3 2010 just before the elections. The MSM harps about the improved "economy", the sheeple do what they are told and re-elect the incumbents.
One could argue that the economic machinations of the PPT in 2009 are a test case for 2010.
People get up in arms over the banker bonuses, politicians could care less as long as the bankers campaign donation checks don't bounce.
Just wait til 3:27 comes.....and we squeeze the shit out of the market.
good timing....
"There is no cause to worry. The high tide of prosperity will continue." - Andrew W. Mellon, Secretary of the Treasury, September 1929
Lulz-a-phucking-saurus! Thanks, primus.
Do we remember THE COMMITTEE TO SAVE THE WORLD ?
That was in February, 1999!
Time to short Bernanke.
got metals?
I'd take up the slack but, my counterfeit printing press isn't working. Shucks, I was hoping I too would be the "Time" magazine man of the year.