Investing Adventures » FOMC

FOMC Leaves Rates Unchanged – June 25, 2008

Jorge — Wed, 25 Jun 2008 18:21:54 +0000

FOMC leaves federal funds rate unchanged this afternoon. Here’s a copy of their statement. I’m not in a good mood so don’t expect anything until I cool off. Sorry.

Release Date: June 25, 2008

For immediate release

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.

Recent information indicates that overall economic activity continues to expand, partly reflecting some firming in household spending. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and the rise in energy prices are likely to weigh on economic growth over the next few quarters.

The Committee expects inflation to moderate later this year and next year. However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.

The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time. Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Voting against was Richard W. Fisher, who preferred an increase in the target for the federal funds rate at this meeting.

2008 Monetary Policy Releases

The Week Ahead…

Jorge — Mon, 23 Jun 2008 12:04:36 +0000

This week should promise to be full of excitement as the FOMC meets Tuesday and Wednesday to decide the fate of the U.S. economy. Well perhaps not the fate, but they will decide on new interest rate policy. At this point, any further rate cuts will probably signal financial suicide, so expect the FOMC not to cut rates. However, some analysts in the financial world are figuring a rate increase from the Fed this week in order to battle inflation and to make an attempt in strengthening the dollar against the rest of the world. Futures this week are showing rates will remain stable at 2.00%. A rate increase at this point would be more symbolic than helpful as it would signal that the inflationary pressures the U.S. has been experiencing are indeed real and a priority. As most of you know, it’s gotten a bit expensive to eat and drive into work. Expect a stronger inflationary statement from the FOMC this week.

On Tuesday, we have consumer confidence at 10:00 am EST. Wednesday brings Durable Goods (8:30 EST), New Home Sales (10:00 EST), and the FOMC announcement (02:15 EST). Thursday’s a fairly important economic day with last quarter’s GDP and Jobless Claims (08:30 am EST), as well as Existing Home Sales (10:00 am EST). And rounding out the week on Friday is Consumer Sentiment at 10:00 am EST. Details can be found here.

Futures were up over 50 points last night but are currently up about 10 points. I’m looking for some sort of a dead cat bounce, but at this rate, I don’t know if it’ll happen. We’ll see!

April 30, 2008 – FOMC Cuts Federal Funds Rate 25 Basis Points to 2.00%

Jorge — Wed, 30 Apr 2008 18:15:38 +0000

The FOMC this afternoon cut the Federal Funds Rate and the Discount Rate by 25 basis points to 2.00% The following is the text of the FOMC announcement.

Release Date: April 30, 2008

For immediate release

The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 2 percent.

Recent information indicates that economic activity remains weak. Household and business spending has been subdued and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters.

Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook remains high. It will be necessary to continue to monitor inflation developments carefully.

The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred no change in the target for the federal funds rate at this meeting.

In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 2-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Atlanta, and San Francisco.

2008 Monetary Policy Releases

FOMC Meeting; Announcement in 60 Minutes

Jorge — Wed, 30 Apr 2008 17:10:57 +0000

The FOMC met yesterday and this morning regarding the state of the economy. The markets are currently pricing in an 80% chance of a 25 basis point cut. So far, the markets are up about 100 points prior to the announcement in approximately 60 minutes. Personally, I hope the Fed decides to hold firm and leave that bullet in its chamber. The markets need time to work through the 300 basis points the FOMC has cut over the past 6-7 months. It takes the economy approximately 6 months to feel the full effects of a rate cut (at least, that’s what I remember from basic macroeconomics). With GDP holding steady at +0.6%, I think the fears of recession are on their way out the door. Stay tuned for the announcement!

FOMC Meeting Tuesday and Wednesday

Jorge — Mon, 29 Oct 2007 17:32:35 +0000

The Federal Open Market Committe (FOMC) “The Fed” will meet tomorrow and Wednesday. What does this mean for you? Well word around The Street says a 25 basis point cut for the federal funds rate is coming. Short term, stocks should shoot somewhat upward, especially after the rough couple of weeks we’ve had. If you deal with currencies and commodities, specifically oil, expect the value of the dollar to drop and the price of oil to gain some strength, at least from my observations from the last rate cut. With the financial sector potentially rallying from the cut, I’ve gone ahead and opened a few calls on the financial sector ETF, the XLF, or Financial Select Sector. I’m just learning about ETFs and how to hedge and gain traction on the overall market so in the coming weeks I’ll go ahead and write up some guidelines on ETFs that options traders tend to focus on.