The Federal Open Market Committee has been meeting the past couple of days to talk interest rates. They wrapped up this afternoon with, it must be said, something of a bombshell. There will be no taper today.
That is, no immediate reduction of the Fed’s big bond-buying program to keep interest rates low.
The financial media world had expected the annoucement to go the other way, which might have created a bit too much hype about the promise of the taper.
“Guilty as charged,” joked the Guardian’s Heidi Moore.
“This is courage,” she argues. “This is the Federal Reserve confronting the reality of the economy and saying it would be madness to start pulling out stimulus now — when unemployment is not doing so well; when personal incomes are falling; and when the housing recovery looks soft.”
Seemingly bad news, that the economy isn’t as recovered as we all though — except maybe for the stock market, which was way up today.
“We’ve used that metaphor before of the quantitiave easing stimulus being something like drugs, and the market being like a meth addict,” adds Moore. “You can think of the market basically saying, ‘Yay, we’re going to keep getting more drugs!’ because if there has been one thing that QE has done well, it’s been to boost the stock market.”
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.