The Fed admitted to its incorrect assessment of the US economy yesterday by highlighting that – the recent weakness in economic activity was reflective of structural weaknesses rather than temporary dynamics (i.e. impact of high commodity prices and events in Japan) and labour market conditions as well as housing markets conditions remain depressed.
In line with its assessment of structural weakness in the US economy, the Fed declared a policy stance whereby the federal funds rate will be maintained at the current exceptionally low level till mid-2013.
The Fed has dealt with the dilemma that it faces of the need to administer more monetary stimulus without
causing commodity prices to run up. We are of the opinion that the US economy is likely to suffer from prolonged
weakness in economic activity given the glaring fault lines in that economy’s edifice. Finally, the continued weakness in the USA will paint countries like India in better light over the next few months.
Don’t you think that America is a bit too late in realizing its mistake of Printing Money at will ? More Shocking was the vested interests of Old man Warren Buffet in US Stocks supporting the wrong doings of the government.