Today’s monetary forecast: Low rates through the summer
Three numbers out today are fodder for fiscal doves to argue that the economy is giving a green light to the Fed to keep buying bonds and pumping money into the economy:
Retail sales: Rose more than forecast in October. Translation: Low borrowing costs and rising home and stock values are juicing the economy. Keep pumping!
Existing home sales: Fell in October to the lowest level in four months as rising interest rates and limited supply crimped the market. Translation: The Fed needs to keep hammering at interest rates, to keep them low so that Americans can afford to buy homes. Keep pumping!
And the kicker, inflation: The Consumer Price Index fell for the first time in six months. Translation: The cost of living is falling, and inflation is still barely moving the needle. Keep pumping!
Add that to Ben Bernanke’s statement last night that the Fed will likely hold down its target interest rate after it stops its quantitative easing program, and possibly after unemployment falls below 6.5 percent, and you have a low interest rate environment that could last until next summer, at least.