Until bank lending increases, the Fed seems happy to leave things as they are, and to focus on the long end of the curve.
Instead of bank lending, we see banks securitizing their loans and keeping their balance sheets flush with cash.
* * * * * J B K * * * * *
San Francisco
The Federal Reserve could keep interest rates ultra-low for even longer than investors expect if the economic outlook worsens or inflation drops, minutes from the central bank's last meeting suggested.
The minutes of the Fed's March 16 gathering, released on Tuesday showed lingering concern about the economy's prospects, with policymakers indicating they were in no hurry to raise interest rates.
"The duration of the extended period prior to policy firming might last for quite some time and could even increase if the economic outlook worsened appreciably or if trend inflation appeared to be declining further," the minutes said.
"Such forward guidance would not limit the committee's ability to commence monetary policy tightening promptly," they said.
