Fed Policy Outlook - Action Economics

Action Bullets

Fed announced extensions and modifications to various securities lending facilities, extending AMLF, CPFF, PDCF, and TSLF to February 1, 2010
FOMC left rates on hold at its June 23, 24 policy meeting, and reiterated it will use all tools available to promote growth and preserve price stability
Fed didn't significantly alter its June statement versus April's, did not alter its buyback tactics, and doesn't give us any new policy guidence
Fed left intact the decision to purchase up to $1.25 tln in agency mortgage backs, up to $200 bln in agency debt through year end, and up to $300 bln in Treasuries by autumn
Fed began buying Treasury's outright (under QE regime) on March 25 and purchases total $150 bln to date, about 1/2 of the $300 bln proposed
TALF began March 18 with borrowers requesting $4.707 bln in loans (Nissan kicked it off with a $1.3 bln request); second round of TALF begins April 7
Fed began buying MBS on January 5 as part of the $500 bln purchase plan announced on November 25; the size was upped by $750 bln to $1.25 tln at March 18 FOMC to a total of $1.25 tln by year end; through April 1 gross purchases total $333 bln
Fed begins buying agency debt outright (under QE) on December 5, and plans to purchase up to $200 bln this year; to date purchases total $76.4 bln
Fed's Beige Book for Jun policy meeting said economy continued to contract but at a slower pace; some improvement in expectations noted in several Districts
FOMC again downgraded its forecasts for growth, job, and inflation as revealed in April FOMC minutes, with central tendency forecast for 2009 GDP knocked down to -2.0% to -1.3% from -1.25% to -0.5%
Fed funds futures irrelevant under new ZIRP policy regime, but are trading upper end of 0% to 0.25% range