The Fed released a statement today stating that we could see a short-term spike in inflation due to increasing oil prices, but that it would even itself out by the end of the year.
While the policy-making committee did not announce new policies Tuesday, it said that it planned to continue its existing campaigns to help growth. The Fed has held short-term interest rates near zero since the end of 2008, and the statement affirmed its plan to maintain that effort until late 2014, at least.The Fed also continues to stockpile Treasury securities in an effort to further reduce borrowing costs for businesses and consumers. The Fed holds about $2.5 trillion in Treasuries and mortgage-backed securities, and it is currently shifting $400 billion into securities with longer terms, to increase the impact on long-term rates. It does not plan to begin winding down the portfolio before 2015.
Fed plans to keep stockpiling Treasury securities to keep interest rates down. What do you monkeys think about this?
Personally, looks like there are some confounding variables in the correlation between growth and the holding of short-term Treasuries...
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