WSJ headlines and questions January 23, 2012. WSJ Headline January 20. Fed Holds Off for Now on Bond Buys Federal Reserve officials are waiting to see how the economy performs before deciding whether to launch another bond-buying program. The Federal Reserve lowered the federal funds rate (overnight rate in the interbank market to between 0 and 25 basis points in the fourth quarter of 2008 and has since pledged not to raise it until at least mid-2013. Since that time expansionary monetary policy has taken place by expanding the Federal Reserve’s holdings of longer term securities, both mortgage-backed securities and longer-term treasuries. The total expansion is more than $2 trillion. The goal is to lower longer-term interest rates. The previous expansions were called QE1 and QE2 (quantitative easing 1 and 2). Fed officials are considering QE3, but are going to wait to see a little more data first. In particular, some of the members of the Federal Reserve’s Federal Open Market
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This note was uploaded on 02/17/2012 for the course FINA 465 taught by Professor Berger during the Spring '11 term at South Carolina.