Fed Gives the Market 'QE Light'
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Stocks pared losses this afternoon after the Federal Reserve left interest rates unchanged, but indicated they would be reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. This action is what some are calling QE (Quantitative Easing) Light.
After trading down over 100 points before the announcement, the Dow is now down just 20 points.
In its statement, the Fed noted that information is showing that the pace of recovery in output and employment has slowed in recent months.
The Fed have been given the flexibility to purchase treasuries as inflation has trended lower in recent quarters and will "be subdued for some time."
The Fed maintained the target range for the federal funds rate at 0 to 1/4 and it expects to maintain "exceptionally low levels of the federal funds rate for an extended period."
Thomas M. Hoenig was the lone Fed member voting against the policy, as he believes the economy is recovering modestly.
In addition to stocks, the news boosted Gold (NYSE: GLD) by $6 to $1207.60.
After trading down over 100 points before the announcement, the Dow is now down just 20 points.
In its statement, the Fed noted that information is showing that the pace of recovery in output and employment has slowed in recent months.
The Fed have been given the flexibility to purchase treasuries as inflation has trended lower in recent quarters and will "be subdued for some time."
The Fed maintained the target range for the federal funds rate at 0 to 1/4 and it expects to maintain "exceptionally low levels of the federal funds rate for an extended period."
Thomas M. Hoenig was the lone Fed member voting against the policy, as he believes the economy is recovering modestly.
In addition to stocks, the news boosted Gold (NYSE: GLD) by $6 to $1207.60.
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