The Federal Open Market Committee meets tomorrow to discuss monetary policy at its regularly scheduled confab. No one expects a rate hike, of course, but the debate about how the central bank might do more with so-called quantitative easing has the crowd buzzing…
►Dow Jones:
Disappointing growth and stubbornly high unemployment is likely to leave Fed officials with the important task of deciding whether to further bump the economy with a debt-buying program, said James Hughes, a market analyst with CMC Markets. “Whether this happens is still very much up in the air, but the reaction by the major markets could well be an aggressive one. Markets could see the move as a good sign of officials seeing the problem and acting before its too late. On the other hand, a further sign of a stuttering economy could well spook the markets in to a bigger fall for equity markets,” said Hughes.
►Bloomberg News:
Treasury two-year yields approached an all-time low amid speculation that the Federal Reserve will resume bond purchases this week as it seeks to safeguard the U.S. economic recovery.

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There are economic recessions, and then there are economic RECESSIONS. The latest encounter with the dark side of the business cycle undoubtedly satisfies the later definition. The challenge, then, is figuring out how to convincingly promote growth on a sustainable, meaningful basis. Part of the solution requires deciding what went wrong, which suggests possible responses. On that analytical front, however, the standard advice from the dismal science these days is flawed, argued Nobel Prize winner Edmund Phelps in a New York Times op-ed last week.

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