January 20, 2020

Debt Downgrade Issues; Farm Bill; Ag Economy; Federal Rules; and Food Safety

Debt Downgrade and the Economy: General Background- Federal Reserve Board Statement

Diane Swonk explained yesterday at the Economic Minds Blog that, “In an unprecedented move, the Federal Open Market Committee (FOMC) signaled that it might hold its zero-interest-rate policy until mid-2013, the longest period it has ever officially committed to any policy. The FOMC also opened the door to changes in both the composition and the size of its balance sheet, which will now likely include a third expansion in the form of large-scale asset purchases (such as Treasury bonds), also known as QE-III. This comes on the heels of the G-7 (Group of Seven most industrialized countries) pledge to do whatever is necessary, after Standard and Poor’s downgraded the credit quality of U.S. Treasuries from AAA to AA+ over the weekend.

“The announcement effect of the Federal Reserve’s bold move today was somewhat blunted, however, by the large number of dissenters to the decision. The Presidents of the Dallas, Minneapolis and Philadelphia Federal Reserve Banks all took particular issue with the extension to the zero-interest-rate policy until mid-2013.”