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Bernanke confirmed that the economy needs help and said buying Treasuries

EL CRONISTA Buenos Aires / Thursday, August 12, 2010

The decision by the U.S. Federal Reserve was in line with the idea of minimum expected in the market. There were no advertisements for "megasalvatajes" but the monetary authorities expressed interest in continuing to prop up the economy, which had been deteriorating. Specifically, the Fed holding the portfolio assets of the institution to prevent draining money from the financial system, making it the first step taken to bolster the economy in more than one year. The central bank said it will reinvest the profits from its mortgage securities in Treasury bills long term. In addition, the Fed retained the commitment to maintain its benchmark interest rate near zero for a "prolonged period". Wall Street losses eased after the Fed's statement but still finished with a red of 0.50%. The dollar fell against the yen but appreciated slightly against the euro climbed while U.S. Treasury bonds.

"The pace of economic recovery is likely to be more modest in the short term than they had expected," said the Federal Open Market Committee in a statement. "To help sustain the economic recovery in a context of price stability, the Committee will keep the portfolio of securities of the Federal Reserve at its current level."

Given that growth in the second quarter slowed and that employment in July was less than expected, the measure validates the risks that have the Fed that the economy has a relapse and re-enter a recession. Hence they can not withdraw its policies of stimuli. "Since the economy is slowing down and that there is little inflation, it is too early to draw back with the stimulus measures," said John Silvia, chief economist at Wells Fargo Securities.

Not so optimistic
The local vision was the responsibility of Delphos Investment. The experts noted that "the statement confirms our view regarding the fundamentals are deteriorating. Also, the more monetary easing is added to the positive technical indicators mentioned on several occasions, which could enable an increase in the rate cut the benchmark U.S. S & P500 (resistance at 1130 points). "

To Finsoport, the consulting Jorge Todesca, "decisions have been accompanied by a statement that leaves no doubt about the climate of pessimism about the U.S. economic situation. The measures were expected and confirm most of the predictions and at the same time show a degree of powerlessness against the adverse course of the crisis. " The consultant adds that "the expectation of recovery that existed a few months ago has been diluted and the Fed's statement seems to say 'let us hope that everything improves, we do not have anything else to do." Do not expect any euphoria in the markets. "

The truth is that the package of assets the Fed is stable at u $ s 2309 billion. Of that amount, about U.S. $ s 1609 billion aid package is injected into the market through various channels over the past three years.

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