While we recalled recent events including the end of quarter earnings report yesterday, we were making predictions on what would be discussed today at the October FOMC meeting. Luckily, we weren’t the only ones curious as to what was talked about, agreed upon, or brought up. Many analysts were speculating that the committee would continue it’s dovish approach, and hint at a tapering in the near future. Other analysts predict no such event will happen before the end of this year, and that we’re lucky if we even hear about it beginning before March 2014. So what did they discuss at the October FOMC meeting?
(photo credit to: IbTimes.com)
Central Bank Blames Government Shutdown
After the harrowing events back in September, the 16 day government shutdown greatly weakened any prospects of advancing towards a taper. Whether all of this was really caused by the government shutdown or we were already destined for this path, the damage has been done. Not only did we lose hundreds of millions of dollars each day the government shutdown was in place, but we also came out of it in a weakened state. Our appearance to other nations shows a fragile economic system, with our consumer and business confidence data severely negatively affected.
Other Topics of October FOMC Meeting
During the October FOMC meeting, the government shutdown wasn’t the only giant Debbie-downer elephant in the room. The Fed went so far as to say that “fiscal policy” was dramatically restraining economic growth. Looking at the collected data, the only two sectors that advanced were household spending and business fixed investments. Other slowing markets noted during the meeting today were the slow moving housing market recovery and labor markets. What was most notable was the concern that they expressed over a run-up in borrowing costs. The committee all agreed that they were comfortable with keeping the same interest rates.
What to Look Out For in Upcoming FOMC Meetings
So at this point, we’re still going to continue buying $85 billion in bonds each and every month. While officials like Bernanke were confident of a taper initiating before the end of the year, recent events and issues have delayed such goals from coming into fruition. Now it seems like everyone is tight-lipped over the topic. If they were to say anything, they would all probably 100% agree that there will be no start to the taper in 2013. Such goals now have dates starting in the early springtime of 2014. Another interesting area to focus on next meeting are any discussions revolving around mortgage rates. Various analysts throughout the industry were very surprised to see that none of the officials brought up their former concerns over the higher mortgage rates. For now, we can merely speculate on the information we have and predict possible plans for the months to come.
We want to know your thoughts, do you think these negative effects and delays would have still happened if we didn’t have a sixteen day government shutdown? Do you think the FOMC would have blamed some other event?
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