Tuesday 16th of March 2010

Fed to Outline 'Exit Strategy' PDF Print E-mail

JON HILSENRATH at the Wall Street Journal writes February 7:

WASHINGTON—Federal Reserve Chairman Ben Bernanke will begin this week to lay out a blueprint for a credit tightening, to be followed once the Fed decides the economy has recovered sufficiently.

The centerpiece will be a new tool Congress gave the central bank in October 2008: an interest rate the Fed pays banks on money they leave on reserve at the central bank. Known as "interest on excess reserves," this rate is now 0.25%.

This week, the Federal Reserve will outline how it will go about raising interest rates and tightening credit once the economy recovers, Jon Hilsenrath reports on the News Hub.

The Fed is still at least several months away from raising interest rates or beginning to drain the flood of money it poured into the financial system in 2008 and 2009. But looking ahead to when the economy is strong enough to warrant tightening credit, officials have been discussing for months which financial levers to pull, when to start and how best to communicate their intent.
To read more, click this link:
http://online.wsj.com/article/SB10001424052748703427704575051442884515742.html
 

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