ben bernanke speak march 13 2012 ; U.S. stocks Monday struggled to extend a winning run into a fourth session ahead of a monetary-policy decision from the Federal Reserve 03/13/2012.
The Federal Open Market Committee releases its statement Tuesday afternoon, with investors looking for any hint of a change in the central bank's monetary policy.
Many analysts anticipate fewer moves by the Federal Reserve to support the economy after the positive February employment report released Friday. Sealy Corp.'s shares jumped 5.1% after its second-biggest shareholder asked the mattress maker to reshuffle its board and faulted Sealy's largest shareholder, private-equity firm KKR & Co., for the company's difficulties.
The Fed will deliver additional quantitative easing over the next 3 to 6 months, according to Nomura. QE will be delivered via purchases of mortgage backed securities (MBS) and Treasuries, with a bias for the former, and will be sterilized in order to appease inflation hawks and critics, Nomura says.
Bernanke must deliver an "insurance ease" to make sure the economy maintains its "escape velocity," Nomura's analysts argue. Under current circumstances, where growth is picking up but the recovery remains fragile, the Fed will prefer "a more nuanced and targeted sterilized-easing approach, which has a lower impact on commodity prices and helps appease inflation hawks in the FOMC," adds Nomura's analysts.
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