Bank Research Consensus Weekly 09.17.12
FX: Fed Easing to Hurt the Dollar
Arne Lohmann Rasmussen, Chief Analyst, Danske Bank
In an aggressive easing step, the Fed this week promised to expand its balance sheet continuously until the labour market shows substantial improvement and committed itself to keep the Fed funds rate at exceptionally low levels until at least mid-2015. In our view, the Fed is taking a big step towards an Evans-style rule and the statement marks an important shift in Fed communication.
Fed Reaffirms Low Interest Rates
John E. Silvia, Chief Economist, Wells Fargo
This week, the Federal Open Market Committee extended its interest rate guidance for continued low federal funds rates to mid-2015 from late 2014 and also announced an open-ended $40 billion per month mortgage-backed securities bondbuying program, while maintaining “Operation Twist” and the reinvestment of paydowns into agency MBS. These actions were expected, and therefore, we are maintaining our interest rate outlook for a steady, low level of the fed funds and Treasury bill rates. Our 10-year Treasury outlook remains at 1.5 percent to 1.9 percent through the end of 2013.
U.S. – Bernanke Delivers the Gift That Keeps On Giving
James Marple, Senior Economist, TD Bank Financial Group
There is really only one thing to talk about this week and that is the Federal Reserve. For several weeks, investors and economists have been waiting to see whether the Fed would announce additional monetary easing. The Fed did not disappoint and this week announced several bold new measures aimed at boosting economic growth and supporting employment.
Compiled by David Song, Currency Analyst
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