Federal Reserve spokesman John Hilsenrath gives us the inside scoop on what’s likely coming down the line at next week’s meeting. He says the Fed is likely to cut its purchases to $65B per month (via MarketWatch):
“The Federal Reserve is on track to trim its bond-buying program for the second time in six weeks as a lackluster December jobs report failed to diminish the central bank’s expectations for solid U.S. economic growth this year, according to interviews with officials and their public comments.
A reduction in the program to $65 billion a month from the current $75 billion could be announced at the end of the Jan. 28-29 meeting, which would be the last meeting for outgoing Chairman Ben Bernanke.”
It will be interesting to see how the market digests this. My guess is the Fed is playing it all by ear. They’re slowly draining the punch bowl, but not pulling it away from the market all at once. If they get the impression that the economy is weaker than they think then they’ll just pour some more back in….
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.