What the FED is going on today? Operation Twist to revive economy?
An increasingly divided Federal Reserve faces stubbornly high unemployment and emerging threats of inflation as its exclusive group of policymakers gathers this week.
They’re likely to do the twist.
Make that Operation Twist, or at least a revamped version of the 1960s Fed effort that got its name from the popular 1960 dance tune by Chubby Checker. The strategy was largely considered a failure at the time but has gained new traction in these difficult times.
Not everyone believes cutting the IOER is the right move for the FED this week
There are expectations across the market that a stimulus measure the Federal Reserve might announce this week will end up hurting investors in the very economy it's trying to revive.
Some market participants expect the Fed, in its two-day policy meeting starting Tuesday, to try bolstering the economy by announcing a reduction or complete elimination of the interest it pays banks for storing excess cash at the central bank. Goldman Sachs said there's a 50% chance this will happen.
The goal is to push banks to start lending and get the economy flowing.
ECB announces additional US dollar liquidity-providing operations over year-end
The Governing Council of the European Central Bank (ECB) has decided, in coordination with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, to conduct three US dollar liquidity-providing operations with a maturity of approximately three months covering the end of the year. These operations will be conducted in addition to the ongoing weekly seven-day operations announced on 10 May 2010. The schedule for these additional operations is as follows:
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