May 21 (Bloomberg) -- Federal Reserve officials, who see possible signs of “stabilization” in the U.S. economy, signaled they’re not convinced those improvements will persist.
Policy makers, meeting April 28-29 in Washington, saw “significant downside risks” to the outlook for the economy, with the global financial system still “vulnerable to further shocks,” minutes of the session released yesterday said.
The report indicates that Fed officials may be ready to build on their plan in March to buy $300 billion of Treasuries should the economy or financial markets deteriorate further. Some policy makers said an increase “might well be warranted at some point to spur a more rapid pace of recovery” from the worst recession in five decades, the minutes showed.
“They are talking about keeping an option open in case things get worse for some reason,” said John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina, who previously worked as a senior economist in Congress. “But if the economy improves, they don’t need to do any more.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=amIq7x9qsHUU&refer=home
I learned this lesson the hard way a long time ago - the more you repeat a message to the market, the less powerful the effect is. It was like Y2K problem, the more people concerned about the issue essentially people are well prepared for any eventuality. Old news to me -- they are just trying to scarce the market to justify QE.
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