Fed Not Playing "Tippy-Toe"-BMO's Dr. Sherry Cooper
CHICAGO, ILLINOIS and TORONTO, ONTARIO--(Marketwire - Sept. 13, 2012) - The Federal Reserve is going to use all the power it can muster to return the U.S. economy to non-inflationary full employment, according to Dr. Sherry Cooper, Chief Economist, BMO Financial Group. Dr. Cooper was commenting following the Fed's announcement today that there will be more quantitative easing and that it is targeting further reductions in long-term interest rates.
"The FOMC is determined to continue along this path," said Dr. Cooper. "They believe they will avoid an inflationary result by selling their bond holdings as and when it is necessary, reversing the quantitative easing and returning their balance sheet to more 'normal levels'."
Dr. Cooper took particular note of the Fed's expectation to maintain a highly accommodative monetary policy for a considerable time after the economic recovery strengthens. "The Fed is aiming for maximum employment and price stability and they do not expect to stop until well after growth is above 2 per cent. The cherry on the top is the extension of the expected period of very low interest rates through to at least the middle of 2015, rather than to the end of 2014."
Dr. Cooper applauded today's moves by the Fed. "This proves they are independent and willing to do what they believe is right regardless of the political fallout. No doubt, they will come under tremendous criticism from politicians and others, but Ben Bernanke has already shown himself impervious to these outside pressures and willing to pursue this path."
Dr. Cooper's full commentary on today's announcement by the Fed can be found at www.bmocm.com/economics.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $542 billion as at July 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.
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