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Kimberly Amadeo from US Economy Guide Shares Insight with Investors on Fed Policy Action and What that Means Moving Forward

Category: Investment

News about US Economy Guide

New York, New York - June 20, 2012 ( Newswire), an investor research portal specializing in sector research presents an interview with Kimberly Amadeo, the US Economy Guide, discussing the Federal Reserve’s plan to deal with the current global economic conditions.

US Stocks were down in anticipation of the Fed's statements, in contrast to European stocks gaining in anticipation of the Fed's policy statement.

Kimberly Amadeo, the US Economy Guide gives investors on the street insight as to what this policy means and what that means for the economy moving forward. More importantly, she addresses what that means to the average investor on the street.


Many folks are expecting the extension of Operation Twist. What does this policy mean? And what does it mean to the average American?

Answer: Kimberly Amadeo

Operation Twist means that the Fed is buying longer term Treasuries and mortgage-backed securities with the funds they receive when their shorter term notes come due. The goal is to keep putting liquidity into the market, making sure there are plenty of funds available.

The goal is to keep interest rates low. However, rates are already at 200 year lows, so they can't go much lower. At this point, the Fed is continuing Operation Twist because the market expects them to. If it stops, then the stock market may go down dramatically.


What course of action do you think the Federal Reserve will take after their meeting?

Answer: Kimberly Amadeo

They announced they will keep the Fed funds rate low until 2014. They will continue to monitor the economy and urge the President and Congress to get the fiscal house in order. There is only so much monetary policy can do.


If what you think comes true, what will it mean for?

a) The economy moving forward? -

Answer: Kimberly Amadeo

The economy will continue to grow at about a 2% rate. Businesses are holding back hiring and other decisions, waiting to see what happens with the eurozone crisis and the fiscal cliff.

b) The average investor? -

Answer: Kimberly Amadeo

The stock market will trade in a narrow range for the most part, with occasional dips down if bad news comes out of Europe. Not much will happen until after the election, unless investors think Greece will leave the eurozone, Spain can't get funding, etc.

Consumers on the street? -

Answer: Kimberly Amadeo

Not much, sorry to say. Most consumers are looking for the housing market to come back (which it is, slowly) and, more important, jobs to return. Until businesses get more confidence, this won't happen. Again, businesses are waiting for election results and good news from Europe. However, gas prices will continue to return to normal, lower levels and consumers should refinance now, not wait.

Kimberly Amadeo Biography: Kimberly Amadeo serves the US Economy Guide. She has over 20 years senior-level experience in economic analysis and business strategy working for major international corporations. She's earned two Master's degrees: one in business from MIT and one in planning from Boston College. This rare combination allows her to tailor business strategy to economic reality.

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