The Fed, which long promised it would pull back on extraordinary measures to keep the economy afloat, might be having second thoughts.
Congress is getting caught up in the November election battle early, reports The Washington Post, leaving the field to the Fed should new actions be necessary.
As evidence, the Post cites comments from St. Louis Fed President James Bullard: "You shouldn't sit on your hands . . . I think there's plenty more we could do if we had to."
Those steps might include:
- Strengthening Fed statements on its commitment to near-zero interest rates.
- Cutting the rate paid to banks to hold reserves to zero from 0.25 percent, thus spurring lending.
- Or, heading back into the mortgage-backed bond market to support a housing recovery, albeit not at the massive volumes of previous months.
Some economists believe that the Fed should get back into quantitative easing in a serious way.
But the Fed leadership is reticent to go that far, the newspaper reports, although members have declined to rule it out.
Read the entire article here.
© 2012 Moneynews. All rights reserved.