The world waits breathlessly for news on Cyprus
Meanwhile another important vote will take place today. In Washington the FOMC
will meet on setting monetary policy.
Despite recent improvement in labor market conditions and economic data and
despite some growing comment if not concern over the potential costs of
aggressively easy policy it is very unlikely that FOMC will vote to change and
reduce monthly asset purchases anytime soon.
The statement following the meeting, and the updated economic projections, will
come at 2 PM and could be revised to reflect the improved tone of data after
prior meeting noted the "temporary" pause in the economy which produced only
+0.1% GDP growth in Q4.
It will probably also reaffirm the continued and intensified downside risks
that Fed has warned of. These include the sequester impact and upcoming fiscal
debates, news from Europe where seemingly calmer situations have been upended
by Italian elections and Cyprus bailout and Asian economic softness.
With net of these forces will leave the Fed at no change in policy.
At 2:30 Chair Bernanke will begin his press conference and he will probably
justify the FOMC decision by saying that the benefits of QE still outweigh
possible costs and that, though Fed is in uncharted monetary territory, it has
the tools and guidance to safely exit.
The drop in the UR, which has been the guiding light of policy, to 7.7% is
probably not nearly enough to define "substantial" improvement since Chicago
Pres Evans has defined such as below 7% and 200K job growth per month for six
months.
There may be more specific recognition of potential risks of QE because "many
participants" in prior meeting voiced concerns but Bernanke still believes that
the greater danger is halting purchases prematurely
se si schiodano da questo stallo uscendo up considero anche possibilità allungo sui 16000 c.ca (di fib)
