The Fed Has Started Talking About Ending Its Economic Stimulus Program

Wall Street Journal reporter John Hilsenrath is so plugged in at the Federal Reserve that he has earned the nickname “Fed Wire.”

Whenever the Fed wants to start sending a new message to Wall Street, the story goes, they call up John Hilsenrath.

And then, thanks to Hilsenrath’s excellent articles, by the time the actual announcement comes out, it’s no big deal, because everyone already knows about it.

And now John Hilsenrath is reporting that the Fed has started talking about when and how to end its latest economic stimulus program:

Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy—an effort to preserve flexibility and manage highly unpredictable market expectations.

Officials say they plan to reduce the amount of bonds they buy in careful and potentially halting steps, varying their purchases as their confidence about the job market and inflation evolves. The timing on when to start is still being debated.

Read more: http://www.businessinsider.com/the-fed-is-talking-about-ending-its-stimulus-2013-5#ixzz2SwWHy8gY

Fed Maps Exit From Stimulus

Timing of Wind-Down Is Uncertain, but Focus Is on Managing Unpredictable Market Expectations

http://online.wsj.com/article/SB10001424127887324744104578475273101471896.html?mod=djemalertNEWS

Fed’s George Pushes for Exit From Bond-Buying Program

JACKSON, Wy.–The president of the Federal Reserve Bank of Kansas City on Friday continued to push for the nation’s central bank to start tightening monetary policy as it moves further from crisis, and the U.S. economy grows.

Esther George said she wants to see the Fed begin to exit its bond-buying program, expressing concerns about what would happen if the central bank doesn’t, in a speech here to business leaders.

“Continuing this current policy outside of a crisis, outside of a recession, poses risks for us in the long term to achieve our objectives of sustainable economic growth,” Ms. George said.

Read more: http://www.foxbusiness.com/news/2013/05/10/fed-george-pushes-for-exit-from-bond-buying-program/#ixzz2SwXu1AyV

Here’s a chart of what has happened when the Fed has stepped off the gas in the past since the financial crisis — it’s not bullish.

https://twitter.com/RonnieSpence/status/333006250155577344/photo/1

Fed maps exit from stimulus

Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy — an effort to preserve flexibility and manage highly unpredictable market expectations.

Officials say they plan to reduce the amount of bonds they buy in careful and potentially halting steps, varying their purchases as their confidence about the job market and inflation evolves. The timing on when to start is still being debated.

http://www.marketwatch.com/story/fed-maps-exit-from-stimulus-2013-05-10-191031815?link=MW_home_latest_news

If we exit QE3 too quickly, the economy will crash. Too slowly, and we’ll see a finance bubble.

Read more at http://investmentwatchblog.com