No Change at the Fed

The Federal Reserve Board announced on Thursday that it is raising the interest rate at which banks borrow from the Fed's discount window to 0.75%, a 25-basis-point increase, and intends to return discount lending primarily to the traditional overnight loans.

Tim Iacono submits: Well, let’s hope that Fed Chief Ben Bernanke’s press conference in an hour or so is just a little bit more exciting than the policy statement that was released after the conclusion of the FOMC (Federal Open Market Committee) meeting a short time

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.

I HAVE been arguing that the Fed's policy statement yesterday was quite restrained—certainly too timid given the economic conditions the Fed itself cites. Others are more bullish on the move. Here's Justin Wolfers, for instance:

Article written by Prieur du Plessis, editor of the Investment Postcards from Cape Town blog.By Cees Bruggemans, Chief Economist of FNB.When projecting inflation to double to over 6% shortly, even a still modestly performing economy should not keep the SARB from taking back some of its recent interest rate generosity, considering that it allowed real interest rates to fade beyond to where they strictly should be under ‘normal’ conditions.

OTTAWA — When Bank of Canada governor Mark Carney moves onto his new U.K. job in July, it is likely little else will have changed back home. Interest rates will still be at near-record lows, and the economy will be continuing to churn out less-than-stellar growth. Not surprisingly, the central bank on Tuesday kept its trend-setting rate on hold at 1%, where it as been since September 2010. That is the longest stagnant period since the early 1950s.

Tim Iacono submits: The Census Bureau reported(.pdf) a larger than expected increase in housing starts last month, however, there was an equally surprisingly decline in permits for new construction, all part of what is likely to be a very long process of rebounding from record low activity in th