Don't End the Fed - Just Ignore It

Volker Wieland is Professor of Monetary Theory and Policy at Goethe University of Frankfurt since 2000 and a Founding Professor of the Institute for Monetary and Financial Stability. Prior to joining the Frankfurt faculty he was a senior economist at the Federal Reserve Board in Washington, DC.

The Federal Reserve ramped up its stimulus to the economy on Wednesday, expressing disappointment with the pace of recovery in employment as contentious U.S. budget talks heighten uncertainty about the outlook. KEY POINTS: * The central bank replaced a more modest stimulus program due to expire at year-end with a fresh round of Treasury purchases that will increase its balance sheet. It committed to monthly purchases of $45 billion in Treasuries on top of the $40 billion per month in mortgage-backed bonds it started buying in September.

By Matteo Radaelli: The Fed is not likely to make any major announcements in the statement released after its monetary policy meeting. The Fed is likely to maintain the Fed Fund rate unchanged at 0/0.25% and confirm its pledge to maintain it on hold at least through late 2014. Moreover, the Fed is likely to confirm its asset purchase program as it was announced in September. The economic outlook depicted in the outlook may change only slightly compared to March.

Tim Duy: Safe Assets and the Coordination of Fiscal and Monetary Policy, by Tim Duy: Kansas City Federal Reserve Bank President Esther George considers the long-run consequences of Federal Reserve policy:

Now that QE2 is in the rear-view mirror, it’s time to get on with business as usual… right?? Well, not exactly.

Earlier this year, we began taking snapshots of S&P's forecast trailing twelve month earnings per share for the S&P 500 at roughly three month intervals. Our chart below shows how the expected future for earnings has changed over time:

TYLER COWEN points us to the blogger at Sober Look, who thinks markets aren't buying the Fed's low-rate communications:Misconceptions still persist that the Fed is on hold with respect to rates until at least late 2014. The markets would disagree. The Fed Funds futures have the first rate hike (25bp) centered around August of next year and the second hike (to 50bp) on July of 2014....