Diane Swonk, Chief Economist
Dec. 16, 2009 – 1:45 p.m. CT
No News is Good News from the Fed
The Federal Open Market Committee (FOMC) – the policy-making arm of the Federal Reserve – voted at their meeting today to stay the course and leave monetary policy unchanged. Moreover, the committee pledged to hold interest rates at their current historic lows for "an extended period of time," which means we are not likely to see a change in interest rates during the first half of next year.
Separately, the Fed explicitly reiterated its plan to stop many of the liquidity programs, including the purchase of mortgage-backed securities, come next March. This suggests a growing level of confidence in the credit market's ability to absorb those assets in early 2010, which may be a bit premature.
The Bottom Line: Fed Chairman Ben Bernanke was chosen Time Magazine's 2009 "Man of the Year" for averting another Great Depression. A repeat performance will be difficult and, as others who have graced the cover of Time – such as Alan Greenspan – know only too well, there is little place to go from here but down.
© 2009 Mesirow Financial Holdings, Inc. ("Mesirow Financial"). All rights reserved.
The information in Diane Swonk's Fed Flash is the proprietary and copyrighted material (the "Copyrighted Material") of Mesirow Financial. The Copyrighted Material, or any portion thereof, may not be reproduced, retransmitted or submitted to any media outlet, or posted on any Web site aside from mesirowfinancial.com without the express written consent of Mesirow Financial. This information provided here in is believed to be obtained from sources deemed to be accurate, timely and reliable. However, no assurance is given in that respect. The reader should not rely on this information in making economic or other decisions. The views expressed herein are those of the author and may not necessarily represent the views of Mesirow Financial, its operating businesses or other of its employees. This communication does not constitute an offer or solicitation, or solicitation of any offer to buy or sell any security, investment or other product. Likewise, this communication serves to provide certain opinions on current market conditions, economic policy or trends and is not a recommendation to engage in, or refrain from engaging, in a particular course of action.
