Trading has been quiet so far this week, as investors anxiously await the Fed’s comments following its two-day Federal Open Market Committee (FOMC) meeting that wraps tomorrow. As we’ve talked about, the market is looking for one thing out of the Fed, and it starts with a “Q.”
Fed chief Bernanke has been elusive about initiating another quantitative easing program, but he has suggested that the bank will step in if economic conditions worsen. With significant economic data points like national unemployment weakening, some analysts expect Bernanke to announce a third round of monetary easing after the meeting adjourns tomorrow. Other analysts, meanwhile, insist that QE3 is still off the table. Instead, they predict that the Fed will either maintain its “watchdog” status quo, or initiate other forms of stimulus that are not quite as extensive as QE3. An example of something we could see announced tomorrow would be cutting the rates the Fed pays on bank deposits so that banks would be encouraged to make loans.
What do you think?
Cast Your Vote!
Will Bernanke give the market what it’s looking for tomorrow?