This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

FOMC Looks Ready to Aid Sluggish Economy

WASHINGTON ( TheStreet -- Noting that the pace of economic growth has slowed in recent months, members of the Federal Open Market Committee appeared ready to move ahead with additional stimulus measures, according to minutes from its last policy-setting meeting on Sept. 21.

Peter Cardillo, chief market economist at Avalon Partners, believes that additional quantitative easing measures will almost certainly be announced following the FOMC's next meeting in early November.

"It's not a question of 'if' or 'when' but of 'how much' -- will it be $500 billion or in excess of a trillion? The Fed already spent a trillion in 2009 and it really didn't have much of an impact -- so how much is really needed?" Cardillo asked.

Stocks turned positive on the news although the Dow Jones Industrial Average was most recently shedding 9 points, or 0.08%, to 11,001. The S&P 500 was ahead by nearly a point, or 0.08%, at 1166 and the Nasdaq was gaining 9 points, or 0.4%, to 2411.

"I think this will continue to fuel investors' appetites for equities because interest rates will stay very low and maybe even inch lower," Cardillo said.

At the September meeting, FOMC members lowered their outlook for economic activity in the second half of 2010 and slightly downgraded the 2011 growth forecast. Members, however, still anticipate mild expansion next year and see stronger growth in 2012. Meanwhile, continued expectations for economic slack were seen as likely to drag on core inflation in 2011. Furthermore, inflation isn't anticipated to show much improvement in 2012.

Committee members agreed that a double-dip recession is unlikely although they also voiced concern that "continued high levels of slack left the economy exposed to potential negative shocks."

High unemployment remains particularly problematic, according to meeting participants, because current job growth is so weak that it isn't likely to make a significant reduction in joblessness at a sufficient pace.

Regarding further stimulus action: "Many participants noted that if economic growth remained too slow to make satisfactory progress toward reducing the unemployment rate or if inflation continued to come in below levels consistent with the FOMC's dual mandate, it would be appropriate to provide additional monetary policy accommodation." Others, however, felt further easing would only be necessary if the "outlook worsened and the odds of deflation increased materially."

The minutes said members weighed several easing options but discussion centered on purchases of longer-term Treasury securities and measures to help inflation expectations.

-- Written by Melinda Peer in New York.

Readers Also Like:

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $129.08 0.48%
FB $79.74 0.98%
GOOG $571.00 2.30%
TSLA $197.27 -3.00%
YHOO $44.10 -0.41%


DOW 18,288.63 +155.93 0.86%
S&P 500 2,116.91 +12.41 0.59%
NASDAQ 5,007.17 +43.6430 0.88%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs