Tags: Fed | Bond | Buying | easing

WSJ Survey: Fed Unlikely to Restart Bond Buying This Year

Friday, 13 April 2012 09:31 AM

The Federal Reserve won’t intervene in the economy this year via bond buybacks, a Wall Street Journal of economists shows.

Since the downturn, the Federal Reserve has acquired $2.3 trillion in bonds from banks, injecting the economy with liquidity in the process with the aim of better ensuring price stability and job creation.

Critics says the policy, known technically as quantitative easing, is basically printing money out of thin air that will fuel inflationary pressures down the road.

Unemployment rates still remain high, but the Fed will stick with a wait-and-see attitude this year as the economy shows some signs of improvement, the survey shows.

Thirty-six of the 51 economists surveyed say the central bank will hold off on easing in 2012, up from 30 in a January survey.

"An entrenched upturn in growth, albeit anemic relative to history, is entering a sweet spot," says Allen Sinai of Decision Economics, the Journal adds.

Editor's Note: You Owe It to Yourself to Know What Obama and Bernanke Are Hiding From Americans

The survey also finds the economy probably grew 2.2 percent in the first quarter of 2012 and will grow 2.7 percent for the full year.

The U.S. economy continues to suffer setbacks on its road to recovery.

In March, for example, the economy added 120,000 jobs, well below most expectations.

Unseasonably warm winter weather brought construction and other jobs online earlier than expected, which pumped up January and February numbers, although the underlying economy still faces headwinds, Fed officials say.

"The somewhat softer March labor market report that was released last Friday may reflect the earlier positive influence of the mild weather on job creation in January and February, although other less sanguine interpretations are also plausible," says Federal Reserve Bank of New York William Dudley, according to Reuters.

The economy needs to grow more in order for the jobs picture to really improve.

"We need sustained growth above that rate to absorb the still substantial amount of unused productive capacity," Dudley says.

"Our recent growth rates are barely keeping up with our potential."

Editor's Note: You Owe It to Yourself to Know What Obama and Bernanke Are Hiding From Americans

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Friday, 13 April 2012 09:31 AM
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