The Federal Reserve is meeting today in Washington. These policy meetings used to be big events but since the Fed has basically done away with interest rates, the meeting outcomes aren’t such a big deal anymore.
Still, the Fed could makes news tomorrow, especially since Tim Geithner hasn’t yet released his bad bank plans. The Fed has been buying back bonds issued by U.S. housing agencies like Fannie Mae. One move the Fed could do is step up those purchases. I’d like to see that and I think it would please the market. Consider that since December, the Fed’s balance sheet has dropped by 17%. Any decision will come around 2:15 pm ET tomorrow.
There’s some good news today. Housing starts rose by 22% in January. Of courses, that’s coming off very depressed levels. Still, it’s nice to see. I was also pleased to see a small rise in wholesale inflation last month. The overall PPI rose by 0.1% and the “core rate,” which excludes food and energy, rose by 0.2%. This is good news for commodity stocks. Tomorrow we’ll get the report on consumer inflation.