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Fed Officials Move Towards Monetary Easing

Jul 10 2012

The Federal Reserve: The Biggest Scam In History

The Federal Reserve: The Biggest Scam In History (Photo credit: CityGypsy11)

As a result of the seemingly weak recovery of US economy coupled with the high rate of unemployment, a few top Federal Reserve makers of policy settled for a third purchase of bonds. As indicated by John Williams, San Francisco Fed president, little progress seems to have been made on their mandates and this calls for new strategies. On the other hand, Richmond Federal president Jeffrey Lacker highlighted on the current rifts at the United States Central bank and expressed his sentiments against bond purchases. The Fed has maintained low rates of standard short-term interest since December 2008, speculated to last till the latter months of the year 2014 in order to boost the economy.

In the past, Fed has embarked on two unparalleled rounds of monetary easing where they bought 2.3 trillion US dollars worth of long-term securities with a view to pushing down costs of borrowing. However, last month brought a lot of economic disappointments that saw Fed slice its stance towards growth. This led to their exchange of short-term securities with long-term ones aimed at lowering rates.

Additionally, it was speculated that inflation would rise by approximately 1.25 % this year and 1.75 % next year due to reduced prices of commodities, an increasing dollar and suppressed labor costs. Providentially this inflation rate is well below the Fed's speculated target of 2%. Williams, one of the Fed officials told reporters that inflation is most likely to remain low due to the fact that growth is also slow but a temporary increase in inflation should not cause distress.

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