(Newser)
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The Federal Reserve yesterday reassured the public that it was “prepared to provide additional accommodation if needed” to support the recovery, but that it didn’t think it was needed just yet. But merely suggesting the possibility was enough to send markets in the right direction, with interest on Treasury bonds falling, in theory making mortgages and other long-term loans cheaper, the Washington Post reports.
“You have an economy slowing down and inflation below where they feel comfortable,” said one economist. “My bet is in November or December they will engage in quantitative easing unless we see a real upside surprise on the economy.” The Fed didn’t change its assessment of the economy—which was that “the pace of recovery in output and employment has slowed”—and if upcoming forecasts don’t show recovery in 2011, they’re sure to consider purchasing bonds and other measures in November.
