Goldman’s Jan Hatzius stands by his call…
We expect the Federal Open Market Committee (FOMC) to ease monetary policy at next week’s scheduled meeting. Our baseline is a new asset purchase program that involves an expansion of the balance sheet, but an extension of Operation Twist and/or a further lengthening of the short-term interest rate guidance in the FOMC statement beyond the current “late 2014” formulation are also possible.
As for the weak economy, the numbers are really getting down there …
Disappointments across a broad range of indicators this week caused a two-tenths decline
in our GDP tracking estimate for Q2 to 1.6%. Though the CPI excluding food and energy held
at 2.3% year-on-year, we see increasing signs that core inflation will fall over the next year.
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