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US Federal Reserve Chairman Ben Bernanke testifies at a congressional hearing on …
The Federal Reserve's top policy panel will on Tuesday begin a two-day meeting in Washington, where it will weigh whether the recovery can make do with less central bank stimulus.
The seven men and three women who vote on the Fed's rate-setting panel will decide whether or not to extend a $600 billion stimulus plan that is scheduled to end in June.
Until recently the choice had appeared straightforward. Growth was picking up nicely and the recovery was, in the Fed's own words, "on a firmer footing."
But amid higher oil prices and government spending cuts, the economy now appears to be slowing.
The Federal Open Market Committee itself is expected to lower its growth forecasts during the meeting.
"We expect a modest downgrade," said Goldman Sachs economist Sven Jari Stehn.
Economists are also worried that consumer prices could be ticking upward, crimping consumer spending and putting the recovery at further risk.
Americans have seen the price of gasoline rise over eight percent in the last month and the average gallon now costs 35 percent more than it did a year ago.
That has left the Fed with a tough choice between potentially pulling the plug on the recovery or continuing spending, which risks fueling inflation that could quickly spill out of control.
Most economists expect the central bank to slowly pull away from its crisis-era policies and allow the purchases to end.
After a failed attempt last year to normalize policies, the Fed is now expected to roll back two years of exceptionally loose monetary policy very cautiously.
"The FOMC will opt to go slowly in reversing policy accommodation, especially after last year's failed attempt to wean the economy off monetary stimulus," said Steven Ricchiuto, chief economist of Mizuho Securities US.
Ricchiuto predicted the Fed would not spend any more than the $600 billion already committed, but would reinvest when the bond or other purchases mature, keeping the level of stimulus in the economy steady for at least three months.
Whatever happens, Fed chairman Ben Bernanke will get a chance to explain the decision when he appears for the Fed's first-ever post-meeting news conference.
But with billions of dollars riding on Bernanke's comments, the conference is expected to be a cautious affair.
"In the future, the press conferences may become an important source of new information about the Fed?s thought process -- probably at the expense of the post-meeting minutes," said Joseph LaVorgna and Carl Riccadonna, economists with Deutsche Bank Securities.
"But in the near term we expect them to be relatively cut-and-dry."
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The seven men and three women who vote on the Fed's rate-setting panel will decide whether or not to extend a $600 billion stimulus plan that is scheduled to end in June.
Until recently the choice had appeared straightforward. Growth was picking up nicely and the recovery was, in the Fed's own words, "on a firmer footing."
But amid higher oil prices and government spending cuts, the economy now appears to be slowing.
The Federal Open Market Committee itself is expected to lower its growth forecasts during the meeting.
"We expect a modest downgrade," said Goldman Sachs economist Sven Jari Stehn.
Economists are also worried that consumer prices could be ticking upward, crimping consumer spending and putting the recovery at further risk.
Americans have seen the price of gasoline rise over eight percent in the last month and the average gallon now costs 35 percent more than it did a year ago.
That has left the Fed with a tough choice between potentially pulling the plug on the recovery or continuing spending, which risks fueling inflation that could quickly spill out of control.
Most economists expect the central bank to slowly pull away from its crisis-era policies and allow the purchases to end.
After a failed attempt last year to normalize policies, the Fed is now expected to roll back two years of exceptionally loose monetary policy very cautiously.
"The FOMC will opt to go slowly in reversing policy accommodation, especially after last year's failed attempt to wean the economy off monetary stimulus," said Steven Ricchiuto, chief economist of Mizuho Securities US.
Ricchiuto predicted the Fed would not spend any more than the $600 billion already committed, but would reinvest when the bond or other purchases mature, keeping the level of stimulus in the economy steady for at least three months.
Whatever happens, Fed chairman Ben Bernanke will get a chance to explain the decision when he appears for the Fed's first-ever post-meeting news conference.
But with billions of dollars riding on Bernanke's comments, the conference is expected to be a cautious affair.
"In the future, the press conferences may become an important source of new information about the Fed?s thought process -- probably at the expense of the post-meeting minutes," said Joseph LaVorgna and Carl Riccadonna, economists with Deutsche Bank Securities.
"But in the near term we expect them to be relatively cut-and-dry."
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12 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentGogMagog Report AbuseWell you idiots, energy prices are something that shouldn't be open to speculation in this country.
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Demand is down, there is no shortage of oil. Yet prices up big... not supply and demand @#$% that we have been fed all these years. This is pure and simple Greed driving prices.
Gas is a regressive tax, so I hope all those that voted Obama understand that he is getting exactly what he said he want. Energy prices to "skyrocket." Youtube Obama Energy Skyrocket, and you can hear his own words. Enjoy your pain at the pump, because you voted for higher gas prices. Next time do your research before you drop your vote in the box.- 9 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentMatt Report Abuse
Hope and Change ain't fillling my gas tank.
Reply - 9 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentRon Report Abuse
Energy and food prices are both thru the roof. It's time to begin raising interest rates, we're looking massive inflation in the eye.
Replies (2) - 7 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentgremlockhateliberals Report Abuse
Obama-Nero lied, the economy died!
Reply - 5 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentCharles B Report Abuse
Economists are also worried that consumer prices could be ticking upward, crimping consumer spending and putting the recovery at further risk.
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These isolated bozos need to pump their own gas and go to buy groceries and they would know prices are going up,. Also, the article with the Walmart CEO saying inflation is here. These guys need to quit smoking so much crack. - 5 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentbrick Report Abuse
Let's see the Mideast is on fire. I wonder if that might affect the future price of oil. I wonder if the devaluation of the US dollar might affect the price of oil. It is a knee jerk reaction to blame big oil. Food and fuel are not part of the consumer price index. What a joke. Now the our economically ignorant POTUS wants to create an straw man argument with the 'greedy oil companies'. Get ready for the windfall profit tax. Our brave intellectual president will head to the nearest college campus to speak to the most gullible and least experienced of Americans. Will the useful idiots re-elect this anit-capitalist zealot this time? The emperor has not clothes. As Turbo Tax Tim says, He would NEVER have a policy that devalues the dollar. The next election will determine the fate of a nation.
Reply - 4 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentCommander. Report Abuse
Supply and demand. You double the number of dollars in circulation and their value gets cut in half. Supply and Demand is a law of nature. get Ready for Q.E. 2, Q.E. 3, hyper stagflation, when the petro dollar collapses the economy evaporates over night and we become like the old Soviet Union. Poof, destitute, poor, starving, other countries will buy our own food supplies out from under us because they will have cash we wont.
Reply - 3 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentjoseph peeler Report Abuse
LOL! There is so much wrong with the journalist's starting assumptions in this article. Higher prices (including oil prices) are a direct result of the Fed's easy money policies. They make it sound like the increased oil prices are causing inflation. The increased prices for oil and everything else is because of monetary inflation for cyring our loud. More so-called QE is only going to cause more pirce inflation. Stocks go up along with everything else in this Fed-created inflationary environment, but those stocks are priced in dollars. If the dollar loses 10% of its purchasing power per annum, a stock must increase in nominal value by 10% per annum just for the investor to break even in purchasing power terms.
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Also, the so-called spending cuts claim is a whopper. If only we were cutting real spending in a meaningfull way!! We are still set to spend MORE than last year. The alleged "cut" is only a cut from what the administration PROPOSED to spend for this year. It's not a cut from last year's budget. This kind of journalism is why so many people think journalists are knuckleheads. - 3 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentRichard Lane Report Abuse
The Fed Reserve Board is killing the US economy, at least the economy most Americans participate in. "Quantitative Easing (printing money) with no corresponding increase in US production of goods and services. The additional money the Fed has put into circulation through Quantitative Easing is being using by small group of fat cats to service their debt. The effect on the rest of us is that since the money supply in circulation has a lot less real value because there is no real increase in US production of goods and service to match the increase in money being pump into the system by the Fed. Proof: higher gold and silver prices, and a higher oil price. And don't be fooled by the increase in stock market performance. There is a lot of that funny money finding its way into stocks. If the increases in the stock market had any real value gold and silver prices would not be as high as they are today. Oil is where the real pain of the Feds is being felt by the average men and women on the street.
Reply - 3 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentKev Report Abuse
May I please have a million dollars?
Reply - 2 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentMrJay214 Report Abuse
Wake up and realize this has nothing to do with speculators and ALL to do with the devaluation of the dollar! Everything is going up. Even coffee is at a 34 year high. Timmy Geithner said a couple of weeks ago that Washington was open to talks with CHINA about a global currency controlled by the IMF who recently announced the end of the age of America!!
Reply - 1 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentThom Report Abuse
They suspect that prices are ticking upward? What do you think was their first clue?
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Time to go all in. Invest in Spam and bullets. We are toast. - 1 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentMichael Report Abuse
The 600 Billion "Stimulus" IS the cause of the high gas and commodity prices.
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When will people learn that inflation is just a massive tax increase? - 1 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentConstitution Party Report Abuse
Give a few trillion more taxpayer dollars to Bernanke, Geithner and Obama's billionaire banker buddies...doing the same thing over and over and expecting different results.
Reply - 1 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentD Lind Report Abuse
Re GogMagog's comment:
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The fact that you want to pay as little as possible for gas makes you greedy. Everytime you fly or use your computer your greediness should make you thank God for speculators.
If you want to get upset, consider the absurdity of a government that claims to support economic growth and prosperity but makes it illegal to freely produce energy -- coal, oil, gas, nuclear. It's like a coach claiming to prepare a runner for the Olympics -- and amputating the runner's left foot.
If you want to get upset about something that in all likelihood WILL happen, wait for price controls on gasoline and you're experiencing Nixonian gas lines around the block. - 6 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 2 users disliked this commentJada Report Abuse
Speculators are not to blame...for starters speculators on gambling what the price of crude oil will be in the future not on what the gallon of gas will be. The spot market affects the price of gas more than the futures market. What does matter is the amount of oil production we do here at home..let's see are we drilling in Anwar, uhhhm no, are we drilling in shallow waters of the coasts, uhhhhm that would also be a no...did Obama place moratoriums on new drilling uhhhm that is a yes..is Obama issuing permits for new Oil Refineries to turn oil into gasoline uhhhm well that is a no..or how about new nuclear technology or clean coal technology...that's a no as well..he is looking into ethanol that's good, except it will dramatically raise the price of food in the country....and as Brick said, the devaluation of our dollar makes all imports more expensive...whooo hoo for this administration
Reply - 0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentJohn Cartmell Report Abuse
Increased spending increases demand which increases production temporarily to fill the new orders. The demand and limited production keeps consumer prices high. But increased production, the result of decreased taxes, causes a race between producers to move as much product onto the market to make profit as quickly as possible before consumer demand is met or competitor products hit the market. The race to produce and compete against other producers causes a surplus of goods and a drop in prices in order to move the extra inventory.
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The Fed needs to get out of the way, allow the free enterprise competition of capitalism to increase jobs and decrease prices, instead of working with the Obama administration and other powers of influence to destroy the American economy as a necessary prerequisite to installing a new world order based on socialism.
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