Monetary Policy -- 4/27 FOMC Wrap Up

The Fed plans to roughly freeze Reserve Bank Credit following the 6/30 wind-up of QE 2.
From there it will go into flex mode, either reducing the FBC balance or supplementing it as
incoming economic and inflation data may suggest. They have left the data trend benchmarks
as well as how They would manage the balance sheet undefined. This will intensify The Street's
focus on data flow and will give free rein to conjecture about future policy regarding liquidity
management.

The FFR% probably stays in lock down mode until later in the year when it may receive
more serious attention. The Treasury 1 yr closed today at 0.22%. Thus the immediate reaction
from investors is to go along with a continuing ZIRP.